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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 19, 2000
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
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
4899
(PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NUMBER)
56-2027322
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
100 REGENCY FOREST DRIVE
SUITE 400
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.
100 REGENCY FOREST DRIVE
SUITE 400
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 PROPOSED MAXIMUM AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED OFFERING PRICE REGISTRATION FEE(1)
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10 3/4% Senior Notes Due 2010................... $200,000,000 $ 52,800
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12 7/8% Senior Discount Notes Due 2010.......... 299,974,428 79,200
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Total................................. $499,974,428 $132,000
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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 on such date as the Commission, acting pursuant to said Section
8(a), may determine.
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EXPLANATORY NOTE
This registration statement covers the registration of $200,000,000
aggregate principal amount of Series B 10 3/4% senior notes due 2010 and
$559,800,000 aggregate principal amount at maturity of Series B 12 7/8% senior
discount notes due 2010 of SpectraSite Holdings, Inc. that may be exchanged for
equal principal amounts and principal amounts at maturity, respectively, of
SpectraSite's outstanding 10 3/4% senior notes due 2010 and 12 7/8% senior
discount notes due 2010. This registration statement also covers the
registration of the registered notes for resale by CIBC World Markets Corp. in
market-making transactions. The complete prospectus relating to the exchange
offer follows immediately after this explanatory note. Following the exchange
offer prospectus are certain pages of the prospectus relating solely to such
market-making transactions, including an alternate front cover page and
alternate sections entitled "Use of Proceeds" and "Plan of Distribution." In
addition, each market-making prospectus will not include the following captions,
or the information set forth under such captions, included in the exchange offer
prospectus: "Risk Factors -- There will be no public trading market for the new
notes, and your ability to sell your notes is limited," "Prospectus
Summary -- Summary of the Exchange Offer," "The Exchange Offer" and "Certain
United States Federal Income Tax Considerations -- Effect of Exchange of
Outstanding Notes for Registered Notes." All other sections of the exchange
offer prospectus will be included in the market-making prospectus.
<PAGE> 3
PROSPECTUS
[SPECTRASITE LOGO]
SPECTRASITE HOLDINGS, INC.
$200,000,000 10 3/4% SENIOR NOTES DUE 2010
$559,800,000 12 7/8% SENIOR DISCOUNT NOTES DUE 2010
OFFER TO EXCHANGE SERIES B 10 3/4% SENIOR NOTES DUE 2010 FOR ANY AND ALL
OUTSTANDING 10 3/4% SENIOR NOTES DUE 2010.
AND
OFFER TO EXCHANGE SERIES B 12 7/8% SENIOR DISCOUNT NOTES DUE 2010 FOR ANY AND
ALL OUTSTANDING 12 7/8% SENIOR DISCOUNT NOTES DUE 2010.
TERMS OF EXCHANGE OFFER
- - Expires 5:00 p.m., New York City time, , 2000, unless extended
- - 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 United States federal
tax purposes
- - We will not receive any proceeds from the exchange offer
- - The terms of the registered 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 registered notes
The notes are eligible for trading in The Portal(SM) Market, a subsidiary
of The Nasdaq Market, Inc. The notes also may be sold in the over-the-counter
market, in negotiated transactions or through a combination of such methods.
WE ARE NOT MAKING AN OFFER TO EXCHANGE NOTES IN ANY JURISDICTION WHERE THE
OFFER IS NOT PERMITTED.
FOR A DISCUSSION OF CERTAIN FACTORS THAT YOU SHOULD CONSIDER BEFORE
PARTICIPATING IN THIS EXCHANGE OFFER, SEE "RISK FACTORS" COMMENCING ON PAGE 10.
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.
, 2000
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TABLE OF CONTENTS
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Summary................................ 2
Risk Factors........................... 10
Use of Proceeds........................ 19
Capitalization......................... 20
Unaudited Pro Forma Financial Data..... 21
Selected Historical Financial Data..... 29
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 31
Business............................... 39
Management............................. 50
Certain Transactions................... 57
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Principal Stockholders................. 64
Description of Certain Indebtedness.... 66
The Exchange Offer..................... 70
Description of the Notes............... 79
Certain United States Federal Tax
Considerations....................... 117
Plan of Distribution................... 125
Legal Matters.......................... 126
Independent Auditors................... 126
Where You Can Find More Information.... 126
Index to Financial Statements.......... F-1
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SpectraSite Holdings, Inc. is a Delaware corporation. Our principal
executive offices are located at 100 Regency Forest Drive, Suite 400, Cary,
North Carolina 27511, and our telephone number at that address is (919)
468-0112. Our World Wide Web site address is http://www.spectrasite.com. The
information in our website is not part of this prospectus.
In this prospectus, Holdings refers to SpectraSite Holdings, Inc., and
SpectraSite, we, us and our refer to SpectraSite Holdings, Inc., its wholly
owned subsidiaries and all predecessor entities collectively, unless the context
requires otherwise. The term cash notes refers to the 10 3/4% senior notes due
2010 offered hereby, the term discount notes refers to the 12 7/8% senior
discount notes due 2010 offered hereby and the terms notes and new notes refer
to the cash notes and the discount notes collectively, unless the context
requires otherwise. The term common stock refers to the common stock, par value
$.001 per share, of Holdings.
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SUMMARY
This 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. You should read the entire
prospectus carefully, especially the risks discussed under "Risk Factors."
SPECTRASITE
OVERVIEW
We are one of the leading providers of outsourced antennae site and network
services to the wireless communications and broadcast industries in the United
States and Canada. Our businesses include the ownership and leasing of antennae
sites on towers, managing rooftop and in-building telecommunications access on
commercial real estate, network planning and deployment, and construction of
towers and related wireless facilities. Our customers are leading wireless
communications providers and broadcasters, including Nextel, Sprint PCS, AT&T
Wireless, VoiceStream Communications, Tritel Communications, Teligent, WinStar,
Cox Broadcasting, Clear Channel Communications and Paxson Communications. As of
December 31, 1999 and after giving effect to the acquisition of Apex Site
Management Holdings, Inc., we owned or managed over 15,000 sites, including
2,765 owned towers, in 98 of the top 100 markets in the United States.
The wireless communications industry is growing rapidly as the demand for
wireless services continues to increase. In addition, as the number and type of
wireless service providers has grown, the industry has also become increasingly
competitive. To meet the increased demand for their services and enhance their
competitive positions, wireless carriers continue to make large capital
investments to expand their networks as well as to satisfy customer demands for
enhanced services, seamless and comprehensive coverage, better call quality,
faster data transmission and lower prices.
We believe that as carriers face the increased challenges of expanding
their networks and improving their services, they must allocate their available
capital and resources in the most efficient manner. In particular, carriers are
increasingly outsourcing tower ownership, as well as network planning,
deployment and management to independent tower owners like SpectraSite. This
outsourcing allows our customers to focus on their core competencies and to rely
on us for planning and deploying their networks. Our services are designed to
improve our customers' competitive positions through the efficient planning,
deployment and management of their networks. Our services include:
- - WIRELESS TOWER OWNERSHIP AND LEASING. We are one of the largest independent
owners and operators of wireless communications towers in the United States
and Canada, with 2,765 owned towers in 43 states and 3 Canadian provinces as
of December 31, 1999.
- - WIRELESS ROOFTOP AND IN-BUILDING ACCESS. We are the largest independent
provider of rooftop and in-building access to the wireless communications
industry in the United States, with approximately 12,700 sites under
management across the country.
- - NETWORK DESIGN AND DEPLOYMENT SERVICES. We are a leading provider of design
and deployment services for wireless networks. These services include radio
frequency engineering, network architecture, microwave relocation, fixed
network engineering, site development, tower and facility construction and
network installation and optimization.
- - BROADCAST TOWER DEVELOPMENT AND LEASING. We are a leading provider of
broadcast tower analysis, design, fabrication, installation and technical
services. We have over 50 years of experience in the broadcast tower industry
and have worked on the development of more than 700 broadcast towers, which we
believe represents approximately 50% of the existing broadcast tower
infrastructure in the
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United States. We intend to capitalize on our broadcast tower development
expertise to create tower ownership and leasing opportunities.
GROWTH STRATEGY
Our objective is to be the leading independent provider of outsourced
antenna site and network services to the telecommunications and broadcast
industries. Key elements of our strategy include:
- - MAXIMIZING THE UTILIZATION OF OUR TOWERS AND MANAGED SITES. We intend to
capitalize on the substantial opportunities for revenue and cash flow growth
by maximizing the number of tenants we have on each of our towers and managed
sites. We believe that our strategy of owning clustered groups of towers and
managed sites in major metropolitan markets and providing our customers with a
full range of products and services allows us to deliver reliable, scalable
network solutions and will result in increased co-location on our towers and
managed sites.
- - EXPANDING OUR TOWER PORTFOLIO. We seek to expand our tower portfolio by
building new towers for anchor tenants and by making selective acquisitions of
towers. We believe that Nextel's agreement to lease space on an additional
1,422 towers we own, acquire or construct for Nextel or other tenants will
substantially increase the number of towers we own and operate.
- - EXPANDING THE SUITE OF SERVICES WE OFFER AND PURSUING CROSS-SELLING
OPPORTUNITIES. We believe our ability to provide a package of integrated
services, which have traditionally been offered by multiple subcontractors
coordinated by a carrier's deployment staff, will make us a preferred provider
of all outsourced antennae site and network services.
RECENT DEVELOPMENTS
On April 7, 2000, we acquired Ample Design, Ltd. for approximately $19.0
million. Ample Design provides wireless network development services in the
United Kingdom.
On April 12, 2000, we entered into an agreement to acquire Lodestar Towers,
Inc. for approximately $170.0 million. Lodestar owns and operates 90 wireless
towers and 10 broadcast towers, and manages an additional 139 wireless towers
and 10 broadcast towers. Lodestar is also in the process of acquiring 27
multi-tenant towers and developing approximately 200 wireless towers. This
acquisition is expected to close in the second quarter of 2000, subject to
customary regulatory approvals.
On April 13, 2000, we entered into a joint venture shareholders' agreement,
pursuant to which SpectraSite and Transco (BG Group plc), the arm of BG Group
plc which runs Britain's gas network, will jointly develop a tower business to
support Europe's growing mobile communications industry. SpectraSite and Transco
will each own 50% of the joint venture. Transco will transfer existing
operational communications towers and industrial land suitable for construction
of new towers into the joint venture, and SpectraSite will provide intellectual
property and wireless network development skills. In addition, SpectraSite will
contribute funds for future developments and possible acquisitions. We also plan
to incorporate Ample Design into the joint venture.
3
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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. This 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 of
Holdings' Series B 10 3/4% senior notes due 2010 which
have been registered under the Securities Act for each
$1,000 principal amount of Holdings' outstanding 10 3/4%
senior notes due 2010, which were issued in March 2000
in a private offering. We are also offering to exchange
$1,000 principal amount at maturity of Holdings' Series
B 12 7/8% senior discount notes due 2010 which have been
registered under the Securities Act for each $1,000
principal amount at maturity of Holdings' outstanding
12 7/8% senior discount notes due 2010, which were also
issued in March 2000 in a private offering.
In order to be exchanged, an outstanding note must be
properly tendered and accepted. We will exchange all
notes validly tendered and not validly withdrawn.
As of this date there is $200,000,000 aggregate
principal amount of cash notes outstanding and
$559,800,000 aggregate principal amount at maturity of
discount notes outstanding.
We will issue registered notes on or promptly after the
expiration of the exchange offer.
Resales................................... We believe that the registered 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:
- you acquire the registered notes issued in the
exchange offer 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 registered 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.
If a broker-dealer receives registered notes for its own
account in exchange for outstanding notes which were
acquired by that broker-dealer as a result of
market-making or other trading activities, then that
broker-dealer must acknowledge that it will deliver a
prospectus meeting the requirements of the Securities
Act in connection with any resale of the registered
notes. A broker-dealer may use this prospectus for an
offer to resell, resale or other retransfer of the
registered notes issued to it in the exchange offer.
Record Date............................... We mailed this prospectus and the related exchange offer
documents to registered holders of outstanding notes as
determined on , 2000.
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Expiration Date........................... The exchange offer will expire at 5:00 p.m., New York
City time, , 2000 unless we decide to extend
the expiration date.
Conditions to the Exchange Offer.......... We may terminate or amend the exchange offer if:
- any legal proceeding, government action or other
adverse development materially impairs our ability to
complete the exchange offer;
- any SEC rule, regulation or interpretation materially
impairs the exchange offer; or
- we have not obtained any necessary governmental
approvals with respect to the exchange offer.
Procedures for Tendering Outstanding
Notes................................... Each holder of outstanding notes wishing to accept the
exchange offer must:
- complete, sign and date the accompanying letter of
transmittal, or a facsimile thereof; or
- arrange for DTC to transmit certain required
information to the exchange agent in connection with a
book-entry transfer.
You must mail or otherwise deliver the documentation
listed above and your outstanding notes to United States
Trust Company of New York, as exchange agent, at the
address set forth under "The Exchange Offer -- Exchange
Agent."
By tendering your outstanding notes in this manner, you
will be representing, among other things, that you meet
the three requirements set forth under "-- Resales"
above.
Untendered Outstanding Notes.............. If you are eligible to participate in the exchange offer
and you do not tender your outstanding notes, you will
not have any further registration or exchange rights and
your outstanding notes will continue to be subject to
restrictions on transfer. Accordingly, the liquidity of
the market for such outstanding notes could be adversely
affected.
Special Procedures for Beneficial
Owners.................................. If you beneficially own outstanding notes registered in
the name of a broker, dealer, commercial bank, trust
company or other nominee and you wish to tender your
outstanding notes in the exchange offer, you should
contact the 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 for the exchange offer and
delivering your outstanding notes, either arrange to
have your outstanding 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.
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Guaranteed Delivery Procedures............ If you wish to tender your outstanding notes and time
will not permit your required documents to reach the
exchange agent by the expiration date of the exchange
offer, or you cannot complete the procedure for
book-entry transfer on time or you cannot deliver
certificates for your outstanding notes on time, you may
tender your outstanding notes according 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 outstanding notes at
any time prior to 5:00 p.m., New York City time, on
, 2000.
Certain United States 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
registered notes in 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
the exchange agent in connection with the exchange
offer.
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SUMMARY OF TERMS OF THE REGISTERED NOTES
The form and terms of the registered notes are the same as the form and
terms of the outstanding notes except that the registered 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. The registered notes will evidence the same debt as the
outstanding notes, and the same indentures will govern both the registered notes
and the outstanding notes.
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THE CASH NOTES
Registered Notes.......................... Series B 10 3/4% senior notes due 2010 of SpectraSite
Holdings, Inc.
Maturity.................................. March 15, 2010
Interest.................................. 10.750% per year, payable semi-annually in arrears on
March 15 and September 15, commencing September 15,
2000.
THE DISCOUNT NOTES
Registered Notes.......................... Series B 12 7/8% senior discount notes due 2010 of
SpectraSite Holdings, Inc.
Maturity.................................. March 15, 2010
Accreted Value and Interest............... The registered discount notes will accrete at a daily
rate of 12.875% per year, compounded semiannually, to an
aggregate principal amount of $559,800,000 by March 15,
2005. Cash interest will begin to accrue on March 15,
2005, and we will pay cash interest on September 15,
2005, and on each March 15 and September 15 thereafter,
at a rate of 12.875% per year.
Original Issue Discount................... For United States federal income tax purposes, the
discount notes were issued with original issue discount
equal to the difference between the issue price of the
discount notes and the sum of all cash payments, whether
denominated as principal or interest, to be made
thereon. Each U.S. holder of a discount note must
include as gross income for U.S. federal income tax
purposes a portion of such original issue discount for
each day during each taxable year in which a discount
note is held, even though cash interest payments will
not be received prior to September 15, 2005. See
"Certain United States Federal Tax Considerations."
ADDITIONAL TERMS OF THE NOTES
Optional Redemption....................... After March 15, 2005, we may redeem all or a portion of
the notes at specified redemption prices, plus accrued
and unpaid interest, to the applicable redemption date.
On any one or more occasions prior to March 15, 2003, we
may buy back up to 35% of the notes with the net cash
proceeds from one or more equity offerings. The
redemption price would be 112.875% of the accreted value
of the discount notes or 110.750% of the principal
amount of the cash notes bought, plus accrued and unpaid
interest, 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 Holdings;
- rank equal in right of payment with all existing and
future unsecured senior indebtedness of Holdings;
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- are senior in right of payment to all future
subordinated indebtedness of Holdings; and
- are effectively subordinated to all indebtedness,
liabilities and other obligations of Holdings'
subsidiaries.
Holdings conducts all operations through its
subsidiaries, and Holdings' subsidiaries are not
guarantors of the notes. As of December 31, 1999, after
giving effect to the offering of the new notes and the
February 2000 public offering of our common stock,
Holdings would have had $1.2 billion of debt
outstanding, and Holdings' subsidiaries had
approximately $245.9 million of indebtedness and other
liabilities.
Certain Covenants......................... The indentures governing the notes contain a number of
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;
- 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 Holdings,
we will offer to repurchase your notes, in whole or in
part, at a price equal to 101% of the principal amount
of the cash notes and the accreted value of the discount
notes, respectively, plus accrued interest, if any. We
might not be able to pay you the required price for
notes you present to us at the time of a change of
control, because:
- we might not have enough funds at that time; or
- the terms of our senior debt may prevent us from
paying.
Form of Registered Notes.................. The registered 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 registered notes in registered form unless one
of the events set forth under the heading "Description
of the Registered Notes -- Book-Entry; Delivery and
Form" occurs. Instead, beneficial interests in the
registered 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.
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SUMMARY UNAUDITED PRO FORMA FINANCIAL INFORMATION
We present the following summary unaudited pro forma financial information
to give you a better understanding of what the results of operations and
financial position of the combined businesses of SpectraSite and Westower
Corporation may have been for the year ended December 31, 1999, if the Westower
merger, the acquisition of 2,000 towers from Nextel Communications, Inc. and the
other transactions described under "Unaudited Pro Forma Financial Data" had
occurred on January 1, 1999. We prepared the unaudited pro forma statement of
operations by adding or combining the historical pro forma results of each
company with adjustments. The companies may have performed differently had they
actually been combined on January 1, 1999. The unaudited pro forma information
is not necessarily indicative of the historical results that we actually would
have had or the future results we will experience.
Tower cash flow consists of site leasing revenues less site leasing costs
of operations. EBITDA consists of operating income (loss) before depreciation
and amortization expense and restructuring and non-recurring charges. Adjusted
EBITDA consists of EBITDA less estimated incremental operating expenses related
to the Nextel tower acquisition. Tower cash flow, EBITDA and adjusted EBITDA are
not measurements of financial performance under generally accepted accounting
principles and should not be considered alternatives to net income (loss) as a
measure of performance or to cash flow as a measure of liquidity. Tower cash
flow, EBITDA and adjusted EBITDA are not necessarily comparable with similarly
titled measures for other companies. Adjusted EBITDA margin is calculated by
dividing adjusted EBITDA by revenues. Tower cash flow, EBITDA and adjusted
EBITDA are provided because they are used in the communications site industry as
measures of operating performance and financial position.
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POST-MERGER
PRO FORMA
YEAR ENDED
DECEMBER 31, 1999
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(DOLLARS IN THOUSANDS)
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STATEMENT OF OPERATIONS DATA:
Revenues.................................................... $177,468
Costs of operations......................................... 105,207
Selling, general and administrative expenses................ 56,621
Depreciation and amortization............................... 61,972
Restructuring and non-recurring charges..................... 7,727
--------
Operating loss.............................................. $(54,059)
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OTHER DATA:
Tower cash flow............................................. $ 37,556
EBITDA...................................................... 15,640
Adjusted EBITDA............................................. 10,998
Adjusted EBITDA margin...................................... 6.2%
SELECTED OPERATING DATA:
Number of towers owned...................................... 2,765
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RISK FACTORS
Ownership of the outstanding notes or the registered notes involves a high
degree of risk. You should consider carefully the risks and uncertainties
described below and the other information in this prospectus, including the
financial statements and related notes, before making an investment decision
regarding the notes. While these are the risks and uncertainties we believe are
most important for you to consider, you should know that they are not the only
risks or uncertainties facing us or which may adversely affect our business. If
any of the following risks or uncertainties actually occurs, our business,
financial condition or results of operations would likely suffer.
OUR LIMITED OPERATING HISTORY MAKES EVALUATING OUR BUSINESS DIFFICULT.
SpectraSite was formed in May 1997, purchased 2,000 towers from Nextel in
April 1999, which represented approximately 72% of our towers as of December 31,
1999, and acquired Westower in September 1999. As a result, we have only a
limited operating history on which you can evaluate our business and prospects.
Our prospects must be considered in the light of the risks, uncertainties,
expenses and difficulties frequently encountered by companies in their early
stages of development, particularly, companies in new and rapidly evolving
industries, such as wireless communications. To address these risks and
uncertainties we must, among other things, successfully:
- co-locate tenants on our towers;
- perform under our agreements with Nextel; and
- integrate our acquisitions.
We may not be successful in accomplishing these objectives.
WE ARE NOT PROFITABLE AND EXPECT TO CONTINUE TO INCUR LOSSES.
On a pro forma basis, we incurred net losses of $135.9 million for the year
ended December 31, 1999. Our losses are principally due to significant
depreciation, amortization and interest expense. We have not achieved
profitability and expect to continue to incur losses for the foreseeable future.
WE HAVE SUBSTANTIAL INDEBTEDNESS, AND SERVICING OUR INDEBTEDNESS COULD REDUCE
FUNDS AVAILABLE TO GROW OUR BUSINESS.
We are highly leveraged and the offering of the outstanding notes increased
our leverage. As of December 31, 1999, we had total consolidated indebtedness of
$718.8 million, and after giving effect to the offering of the outstanding
notes, our total consolidated indebtedness was $1.2 billion. Our high level of
indebtedness could interfere with our ability to grow. For example, it could:
- 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;
- limit our flexibility in planning for, or reacting to, changes in our
business and the industry; and
- place us at a competitive disadvantage relative to less leveraged
competitors.
Our ability to generate sufficient cash flow from operations to pay
principal of, and interest on, our indebtedness is uncertain. In particular, we
may not meet our anticipated revenue growth and operating expense targets, and
as a result, our future debt service obligations could exceed cash available to
us. Further, we may not be able to refinance any of our indebtedness on
commercially reasonable terms or at all.
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<PAGE> 14
HOLDINGS IS A HOLDING COMPANY AND ITS ONLY SOURCE OF CASH TO PAY INTEREST ON,
AND THE PRINCIPAL OF, THE 2008 NOTES, THE 2009 NOTES AND THE NEW NOTES IS
DISTRIBUTIONS FROM OUR SUBSIDIARIES.
Holdings is a holding company with no business operations of its own.
Holdings' only significant asset is and will be outstanding capital stock of its
subsidiaries. Holdings conducts all of its business operations through its
subsidiaries. Accordingly, Holdings' only source of cash to pay interest on, and
the principal of, its 12% senior discount notes due 2008, its 11 1/4% senior
discount notes due 2009 and the new notes is distributions with respect to its
ownership interest in its subsidiaries from the earnings and cash flow generated
by those subsidiaries. We currently expect that Holdings' subsidiaries will
retain and use any earnings and cash flow to support their operations, including
to service their respective debt obligations. We cannot assure you that the
subsidiaries will generate sufficient earnings and cash flow to pay dividends on
distributions to Holdings or that applicable state law and contractual
restrictions, including negative covenants contained in the debt instruments of
Holdings' subsidiaries, will permit such dividends or distributions.
Our credit facility prohibits, subject to certain limited exceptions,
dividends or other distributions by Holdings' subsidiaries to Holdings. However,
the credit facility permits distributions to Holdings in an amount sufficient to
pay scheduled interest payments on the 2008 notes commencing in 2003, the 2009
notes commencing in 2004, the discount notes commencing in 2005 and the cash
notes commencing later this year, provided that there is no default or event of
default outstanding under the credit facility, including under the financial
maintenance tests the credit facility sets forth. If Holdings' subsidiaries are
unable to make distributions to Holdings, we will have to pursue other
alternatives to make the scheduled interest payments, which may include
refinancing the credit facility or seeking other sources of debt or equity
capital. We cannot assure you that we would be able to secure sources of capital
on terms acceptable to us or at all. For more information regarding the credit
facility, see "Description of Certain Indebtedness--Credit Facility."
YOUR RIGHT TO RECEIVE PAYMENTS ON THE NEW NOTES IS EFFECTIVELY JUNIOR TO CERTAIN
EXISTING INDEBTEDNESS AND ALL FUTURE BORROWINGS OF HOLDINGS' SUBSIDIARIES.
The 2008 notes, the 2009 notes and the new notes rank equally in right of
payment. Holdings' subsidiaries are not guarantors of the 2008 notes, the 2009
notes or the new notes. As a result, all indebtedness of Holdings' subsidiaries,
including any borrowings under the credit facility and other liabilities, will
be structurally senior to the new notes. At December 31, 1999, Holdings'
subsidiaries had $245.9 million of debt and other liabilities and the ability to
borrow $300.0 million under our credit facility, all of which will be
structurally senior in right of payment to the 2008 notes, the 2009 notes and
the new notes. In addition, our credit facility contemplates additional
borrowings from affiliates of certain of our shareholders with the approval of
the majority of the lenders under the credit facility. For more information
about the terms of our credit facility, see "Description of Certain
Indebtedness--Credit Facility."
In addition, Holdings' subsidiaries will be permitted, under the terms of
the indentures governing the 2008 notes, the 2009 notes and the new notes, to
incur certain additional indebtedness that may restrict or prohibit the
subsidiaries from making distributions, paying dividends or making loans to
Holdings and to guarantee other indebtedness of Holdings without guaranteeing
the new notes. If any or all of Holdings' subsidiaries become subject to
bankruptcy proceedings before payment of the notes, we do not expect the note
holders to have claims in the proceedings. Only after the applicable
subsidiaries' creditors are fully paid would any remaining value of the
subsidiaries' assets be available to Holdings or its creditors, including the
note holders.
REPAYMENT OF THE PRINCIPAL OF THE 2008 NOTES, THE 2009 NOTES AND THE NEW NOTES
LIKELY WILL REQUIRE ADDITIONAL FINANCING. WE ARE NOT CERTAIN OF THE SOURCE OR
AVAILABILITY OF ANY SUCH FINANCING AT THIS TIME.
We currently anticipate that, in order to pay the principal of the 2008
notes, the 2009 notes and the new notes, or to redeem or repurchase the notes
upon a change of control as defined in the indentures
11
<PAGE> 15
governing the notes, we will be required to adopt one or more alternatives, such
as refinancing our indebtedness or selling our equity securities or the equity
securities or assets of our subsidiaries. We cannot assure you that we could
effect any of the foregoing alternatives on terms satisfactory to us, that any
of the foregoing alternatives would enable us to pay the principal of the notes
or that any of such alternatives would be permitted by the terms of the
indentures governing the 2008 notes, the 2009 notes or the new notes or any
other debt instruments then in effect.
OUR BUSINESS DEPENDS ON THE DEMAND FOR WIRELESS COMMUNICATIONS SITES AND OUR
ABILITY TO SECURE CO-LOCATION TENANTS.
Our business depends on demand for communications sites from wireless
service providers, which, in turn, depends on the demand for wireless services.
A reduction in demand for communications sites or increased competition for
co-location tenants could have a material adverse effect on our business,
financial condition or results of operations. In particular, the success of our
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. The extent to which
wireless service providers lease communications sites on our towers depends on
the level of demand for wireless services, the financial condition and access to
capital of those providers, the strategy of providers with respect to owning or
leasing communications sites, government licensing of communications licenses,
changes in telecommunications regulations, the characteristics of each company's
technology, and geographic terrain.
A SIGNIFICANT PORTION OF OUR REVENUES AND TOWER CONSTRUCTION ACTIVITY DEPENDS ON
NEXTEL.
Nextel accounts for a significant portion of our total revenues. On a pro
forma basis, Nextel represented approximately 29% of our revenues for the year
ended December 31, 1999. If Nextel were to suffer financial difficulties or if
Nextel were unwilling or unable to perform its obligations under its
arrangements with us, our business, financial condition or results of operations
could be materially and adversely affected.
The financial data related to the Nextel towers set forth in the unaudited
pro forma financial statements are estimated amounts provided by Nextel. Neither
the independent auditors of SpectraSite nor Nextel have separately audited this
financial data. We believe the estimated amounts are factually supported and
based on reasonable assumptions. However, these amounts may not accurately
reflect the results of operations from the Nextel towers for the periods
presented or the operating results that we can expect from the Nextel towers in
the future.
Nextel agreed to lease 1,700 additional sites on our towers as part of its
national service deployment, and as of December 31, 1999, they had leased 278 of
those sites. Under the terms of our agreements with Nextel, we are required to
construct or purchase agreed upon numbers of qualified towers at specified
times, and in the case of towers we purchase from Nextel, at specified prices.
Our failure to construct or purchase the towers as agreed could result in the
cancellation of our right to construct or purchase additional towers under these
agreements. Such a cancellation could have a material adverse effect on our
business, financial condition or results of operations and on our ability to
implement or achieve our business objectives in the future.
Under our agreements with Nextel, subject to limited exceptions, we will be
required to construct new towers in locations to be determined by Nextel. These
towers may have limited appeal to other providers of wireless communications
services, which may limit our opportunities to attract additional tenants,
which, in turn, could have a material adverse effect on our business, financial
condition or results of operations.
WE MAY ENCOUNTER DIFFICULTIES IN INTEGRATING ACQUISITIONS WITH OUR OPERATIONS,
WHICH COULD LIMIT OUR REVENUE GROWTH AND OUR ABILITY TO ACHIEVE OR SUSTAIN
PROFITABILITY.
Acquiring additional tower assets and complementary businesses is an
integral part of our business strategy. We may not be able to realize the
expected benefits of past or future acquisitions or identify suitable
acquisition candidates. Our ability to complete future acquisitions will depend
on a number of
12
<PAGE> 16
factors, some of which are beyond our control, including the attractiveness of
acquisition prices and the negotiation of acceptable definitive acquisition
agreements. In addition, the process of integrating acquired operations into our
existing operations may result in unforeseen operating difficulties, divert
managerial attention or require significant financial resources that could
otherwise be used for existing tower construction and network deployment
contracts. Future acquisitions also may require us to incur additional
indebtedness and contingent liabilities, which could have a material adverse
effect on our business, financial condition and results of operations.
WE MAY BE UNABLE TO INCREASE OUR CONSTRUCTION ACTIVITIES OR TO ACQUIRE TOWERS AS
CONTEMPLATED BY OUR GROWTH STRATEGY.
Our growth strategy depends on our ability to construct, acquire and
operate towers as wireless service providers expand their tower network
infrastructure. Regulatory and other barriers could adversely affect our ability
to construct towers in accordance with the requirements of our customers, and,
as a result, we may be subject to penalties and forfeiture provisions under our
anchor tenant leases. Our ability to construct new towers may be affected by a
number of factors beyond our control, including zoning and local permitting
requirements, FAA considerations, FCC tower registration procedures,
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.
Our expansion plans call for a significant increase in construction
activity. We may not be able to overcome the barriers to new construction, and
we may not complete the number of towers planned for construction. Our failure
to complete the necessary construction could have a material adverse effect on
our business, financial condition or results of operations.
We compete for tower acquisition opportunities with wireless service
providers, broadcasters, site developers and other independent tower owners and
operators, and we expect competition to increase. Increased competition for
acquisitions may result in fewer acquisition opportunities and higher
acquisition prices. We regularly explore acquisition opportunities; however, we
may have trouble identifying towers or tower companies to acquire in the future.
WE COMPETE WITH COMPANIES THAT MAY HAVE GREATER FINANCIAL RESOURCES.
If we are unable to successfully compete, our business will suffer. We
believe that tower location and capacity, price, quality of service and density
within a geographic market historically have been, and will continue to be, the
most significant competitive factors affecting the site leasing business. We
compete for site leasing tenants with:
- wireless service providers that own and operate their own towers and
lease, or may in the future decide to lease, antenna space to other
providers;
- other independent tower operators;
- site acquisition companies which acquire antenna space on existing towers
for wireless service providers, manage new tower construction and provide
site acquisition services; and
- owners of non-tower antenna sites, including rooftops, water towers and
other alternate structures.
Wireless service providers that own and operate their own towers generally
are substantially larger and have substantially greater financial resources than
SpectraSite. For example, AT&T Wireless and Sprint PCS own and operate their own
tower networks.
We compete for acquisition, new tower construction and network development
opportunities primarily with other independent tower companies and site
construction firms. Some of these competitors may have greater financial
resources than we have.
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<PAGE> 17
RAPID GROWTH COULD STRAIN OR DIVERT OUR MANAGEMENT TEAM AND WILL INCREASE OUR
OPERATING EXPENSES.
Implementation of our business strategy 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. Our failure to manage growth or unexpected
difficulties encountered during our expansion could have a material adverse
effect on our business, financial condition or results of operations. The
pursuit and integration of acquisitions, investments, joint ventures and
strategic alliances will require substantial attention from our senior
management, which will limit the amount of time they have available to devote to
existing operations.
WE ANTICIPATE SIGNIFICANT CAPITAL EXPENDITURES AND MAY NEED ADDITIONAL FINANCING
WHICH MAY NOT BE AVAILABLE.
Our current plans call for approximately $200.0 million of capital
expenditures during the first half of 2000 for the construction and acquisition
of communication sites, primarily towers. We had approximately $300.0 million
available under our credit facility as of December 31, 1999, and after giving
effect to our public offering of common stock in February 2000 and to the
offering of new notes, we would have had approximately $934.0 million of cash
and cash equivalents. However, if acquisitions or other opportunities present
themselves more rapidly than we currently anticipate or if our estimates prove
to be inaccurate, we may need additional sources of debt or equity capital prior
to the end of 2000. Additional financing may not be available or may be
restricted by the terms of the credit facility and the indentures governing our
senior discount notes.
COMPETING TECHNOLOGIES AND OTHER ALTERNATIVES COULD REDUCE THE DEMAND FOR OUR
SERVICES.
Most types of wireless services currently require ground-based network
facilities, including communications sites for transmission and reception. The
development and growth of communications technologies which do not require
ground-based sites or other alternatives could reduce the demand for space on
our towers.
In particular, the emergence of new technologies that do not require
terrestrial antenna sites and can be substituted for those that do, could have a
negative impact on our operations. For example, the FCC has granted license
applications for several low-earth orbiting satellite systems that are intended
to provide mobile voice and data services; one system had been operating, but
has had to suspend service while in bankruptcy proceedings, and another has
recently initiated service. In addition, the FCC has issued licenses for several
low-earth orbiting satellite systems that are intended to provide solely data
services, and one of those systems is operational. Although these systems are
highly capital-intensive and have only begun to be tested, mobile satellite
systems could compete with land-based wireless communications systems, thereby
reducing the demand for the infrastructure services we provide. Reduced demand
for ground-based antenna sites could have a material adverse effect on our
business, financial condition or results of operations.
In addition, wireless service providers frequently enter into agreements
with competitors allowing them to utilize one another's wireless communications
facilities to accommodate customers who are out of range of their home
providers' services. These roaming agreements may be viewed by wireless service
providers as a superior alternative to leasing space for their own antennae on
communications sites we own. The proliferation of these roaming agreements could
have a material adverse effect on our business, financial condition or results
of operations.
A SMALL NUMBER OF STOCKHOLDERS CONTROLS THE VOTING POWER OF HOLDINGS, AND THESE
STOCKHOLDERS' INTERESTS MAY BE DIFFERENT FROM YOURS.
Affiliates of Welsh, Carson, Anderson & Stowe owned 32.4 million shares, or
26%, of our common stock at February 29, 2000. This ownership will allow Welsh,
Carson to exert significant influence over the management and policies of
SpectraSite. In addition, Welsh, Carson and certain other Holdings' stockholders
have a right to board representation under a stockholders' agreement. Welsh,
Carson and the
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<PAGE> 18
other parties to the stockholders' agreement may have interests that are
different from your interests as a holder of debt securities. See "Certain
Transactions--Stockholders' Agreement."
OUR BUSINESS DEPENDS ON OUR KEY PERSONNEL.
Our future success depends to a significant extent on the continued
services of our Chief Executive Officer, Stephen H. Clark, our Chief Operating
Officer, Timothy G. Biltz, our Chief Financial Officer, David P. Tomick, our
Executive Vice President--Business Development, Richard J. Byrne, and our
Executive Vice President--Design and Construction, Calvin J. Payne. Although
each of these officers other than Mr. Biltz has an employment agreement with
Holdings, the loss of any of these key employees would likely have a
significantly detrimental effect on our business.
OUR OPERATIONS REQUIRE COMPLIANCE WITH AND APPROVAL FROM FEDERAL AND STATE
REGULATORY AUTHORITIES.
We are subject to a variety of regulations, including those at the federal,
state and local levels. Both the FCC and the FAA regulate towers and other sites
used for wireless communications transmitters and receivers. Failure to comply
with applicable requirements may lead to civil penalties and tort liability.
These regulations control siting, marking, and lighting of towers and may,
depending on the characteristics of the tower, require registration of tower
facilities with the FCC. Wireless communications devices operating on towers are
separately regulated and independently licensed by the FCC based upon the
particular frequency used and the services being provided. Any proposals to
construct new communications sites or modify existing communications sites that
could affect air traffic must be reviewed by the FAA to ensure that the
proposals will not present a hazard to aviation. Tower owners may have an
obligation to paint their towers or install lighting to conform to FCC and FAA
standards and to maintain such painting or lighting. Tower owners also may bear
the responsibility for notifying the FAA of any tower lighting failure.
SpectraSite generally indemnifies its customers against any failure by
SpectraSite to comply with applicable standards.
Local regulations include city or other local ordinances, zoning
restrictions and restrictive covenants imposed by community developers. These
regulations vary greatly, but typically require tower owners to obtain approval
from local officials or community standards organizations prior to tower
construction. Local regulations can delay or prevent new tower construction or
site upgrade projects, thereby limiting our ability to respond to customers'
demands. In addition, these regulations increase the costs associated with new
tower construction. Existing regulatory policies may adversely affect the timing
or cost of new tower construction, and additional regulations may be adopted
that will increase these delays or result in additional costs to SpectraSite.
These factors could have a material adverse effect on our business, financial
condition or results of operations and on our ability to implement or achieve
our business objectives.
The FCC has initiated a rulemaking proceeding to consider how to improve
telecommunications service providers' access to rooftops, other rights-of-way
and conduits in multi-tenant buildings. The FCC is considering whether such
access should be mandated and, if so, under what rules, terms, and conditions.
While new telecommunications entrants have supported the proposals, building
owners and incumbent local exchange carriers have argued that the proposals are
unconstitutional and that the agency lacks the statutory authority to adopt
them. Federal legislation addressing access by telecommunications providers to
multi-tenant buildings, as well as other legislative proposals concerning tower
siting and related environmental issues, may also be considered in the coming
year. We cannot predict whether these regulatory and legislative initiatives
will be adopted and, if they are, the effect that they will have on our
business.
As part of the Westower merger, we acquired operations in Canada and an
interest in a Brazilian joint venture. As a result, we are subject to regulation
in those jurisdictions. If we pursue additional international opportunities, we
will be subject to regulation in additional foreign jurisdictions. In addition,
our customers also may become subject to new regulatory policies which may
adversely affect the demand for communications sites.
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<PAGE> 19
WE GENERALLY LEASE THE LAND UNDER OUR TOWERS AND MAY NOT BE ABLE TO MAINTAIN
THESE LEASES.
Our real property interests relating to towers primarily consist of
leasehold interests, private easements and licenses, easements and rights-of-way
granted by governmental entities. A loss of these interests would interfere with
our ability to conduct our business and generate revenues. Our ability to
protect our rights against persons claiming superior rights in towers depends on
our ability to:
- recover under title policies, the policy limits of which may be less than
the purchase price of a particular tower;
- in the absence of title insurance coverage, recover under title
warranties given by tower sellers, which warranties often terminate after
the expiration of a specific period, typically one to three years; and
- recover under title covenants from landlords contained in lease
agreements.
WE ARE SUBJECT TO ENVIRONMENTAL LAWS THAT IMPOSE LIABILITY WITHOUT REGARD TO
FAULT.
Our operations are subject to federal, state, provincial, local, and
foreign environmental laws and regulations regarding the use, storage, disposal,
emission, release and remediation of hazardous and nonhazardous substances,
materials or wastes. Under these laws, SpectraSite could be held strictly, as
well as jointly and severally, liable for the investigation and remediation of
hazardous substance contamination at its facilities or at third-party waste
disposal sites and also could be held liable for any personal or property damage
related to such contamination. Although we believe that we currently have no
material liability under applicable environmental laws, the costs of complying
with existing or future environmental laws, investigating and remediating any
contaminated real property and resolving any related liability could have a
material adverse effect on our business, financial condition or results of
operations.
The FCC requires tower owners who are subject to the agency's antenna
structure registration program to comply at the time of registration with
federal environmental rules that may restrict the siting of towers. Under these
rules, tower owners are required initially to identify whether proposed sites
are in environmentally sensitive locations. If so, the tower owners must prepare
and file environmental assessments, which must be reviewed by the FCC staff
prior to registration and construction of the particular towers.
OUR TOWERS MAY BE DAMAGED BY NATURAL DISASTERS.
Our towers are subject to risks associated with natural disasters such as
ice and wind storms, tornadoes, hurricanes and earthquakes. We self-insure all
of our wireless communications towers against such risks. 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.
PERCEIVED HEALTH RISKS OF RADIO FREQUENCY EMISSIONS COULD IMPACT OUR BUSINESS.
The wireless service providers that utilize our towers are subject to FCC
requirements and other guidelines relating to radio frequency emissions. The
potential connection between radio frequency emissions and certain negative
health effects, including some forms of cancer, has been the subject of
substantial study by the scientific community in recent years. To date, the
results of these studies have been inconclusive. If radio frequency emissions
were conclusively proved harmful, our tenants and possibly we could face
lawsuits claiming damages from such emissions and demand for wireless services
and new towers would be adversely affected. Although we have not been subject to
any claims relating to radio frequency emissions, we cannot assure you that
these claims will not arise in the future. The FCC finalized its rules regarding
compliance with safety limits for human exposure to radio frequency emissions
effective October 15, 1997 for transmitting facilities and operations.
Facilities and operations authorized and licensed prior to that date have until
September 1, 2000 to come into compliance. It is the responsibility of our
communications tenants to undertake an environmental evaluation and, if
required, to come into compliance with the rules.
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<PAGE> 20
THE ISSUANCE OF THE DISCOUNT NOTES AT A SUBSTANTIAL DISCOUNT MAY HAVE
UNFAVORABLE CONSEQUENCES TO US AND THE PURCHASERS OF THE DISCOUNT NOTES.
The discount notes were originally issued at a substantial discount from
their principal amount at maturity, also referred to as original issue discount.
As a result, if you purchased the discount notes, you generally will be required
to include amounts in gross income for United States federal income tax purposes
in advance of receipt of the cash payments to which such income is attributable.
See "Certain United States Federal Tax Considerations" for a more detailed
discussion.
If a bankruptcy case is commenced by or against us under the U.S.
Bankruptcy Code after the issuance of the discount notes, your claim as a holder
of the discount notes with respect to the principal amount thereof may be
limited to an amount equal to the sum of (1) the initial issue price and (2)
that portion of the original issue discount that is not deemed to constitute
unmatured interest for purposes of the U.S. Bankruptcy Code. Any original issue
discount that was not amortized as of any such bankruptcy filing would
constitute unmatured interest.
The discount notes constitute applicable high yield discount obligations,
also referred to as AHYDOs. As a result, we (1) are not entitled to deduct
original issue discount accruing with respect thereto until such amounts are
actually paid and (2) are precluded from deducting a portion of the original
issue discount that accrues on the notes at any time. See "Certain United States
Federal Tax Considerations--U.S. Holders--The AHYDO Rule" for a more detailed
discussion.
THERE WILL BE NO PUBLIC TRADING MARKET FOR THE NEW NOTES, AND YOUR ABILITY TO
SELL YOUR NOTES IS LIMITED.
The outstanding new 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
registered new notes will be registered under the Securities Act, but will
constitute a new issue of securities with no established trading market, and:
- any market that may develop may not be liquid;
- the registered note holders may not be able to sell their notes; or
- the registered note holders may not be able to sell their notes at a
favorable price. If such a market were to exist, the registered notes may
trade at higher or lower prices 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
SpectraSite.
The notes are designated for trading among qualified institutional buyers
in The Portal(SM) Market. We understand that Morgan Stanley & Co. Incorporated,
CIBC World Markets Corp., Credit Suisse First Boston Corporation, Deutsche Bank
Securities Inc., Lehman Brothers Inc., BMO Nesbitt Burns Corp. and Scotia
Capital (USA) Inc. presently intend to make a market in the new 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, this
market-making activity will be subject to the limits imposed by the Securities
Act and the Securities Exchange Act of 1934, and may be limited during the
exchange offer or the pendency of an applicable shelf registration statement. No
active trading market may exist for the notes and any trading market which does
develop may not be liquid.
Notes that are not tendered or are tendered but not accepted will,
following the completion of the exchange offer, continue to be subject to
existing restrictions on transfer, and, upon completion of the exchange offer,
registration rights with respect to the outstanding notes will terminate. In
addition, any outstanding note holder who tenders in the exchange offer for the
purpose of participating in a distribution of the registered 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. To the extent that outstanding notes
are tendered and accepted in the exchange
17
<PAGE> 21
offer, the trading market for untendered and tendered but unaccepted outstanding
notes could be adversely affected.
WE ARE NOT OBLIGATED TO NOTIFY YOU OF UNTIMELY OR DEFECTIVE TENDERS OF
OUTSTANDING NOTES.
We will issue registered notes in this exchange offer only after a timely
receipt of your outstanding notes, a properly completed and duly executed letter
of transmittal and all other required documents. Therefore, if you want to
tender your outstanding 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 outstanding notes for exchange.
CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING PRONOUNCEMENTS.
This prospectus contains forward-looking statements, including statements
concerning possible or assumed future results of operations of SpectraSite and
those preceded by, followed by or that include the words believes, expects,
anticipates or similar expressions. You should understand that the following
important factors, in addition to those discussed elsewhere in this document,
could affect our future results and could cause results to differ materially
from those expressed in such forward-looking statements:
- materially adverse changes in economic conditions in the markets we
serve;
- future regulatory actions and conditions in our operating areas;
- competition from others in the communications tower industry;
- the integration of our operations with those of businesses we have
acquired or may acquire in the future and the realization of the expected
benefits; and
- other risks and uncertainties as may be detailed from time to time in our
public announcements and SEC filings.
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USE OF PROCEEDS
Holdings will not receive any cash proceeds from the issuance of the
registered notes in exchange for the outstanding notes. In consideration for
issuing the registered notes, Holdings will receive outstanding cash notes of
like original principal amount and outstanding discount notes in like original
principal amount at maturity, as the case may be. Outstanding notes received in
the exchange offer will be cancelled.
The gross proceeds to SpectraSite from the original issuance of the
outstanding notes was approximately $485.0 million. SpectraSite will use the
proceeds to fund costs related to the construction and acquisition of new towers
and for working capital and general corporate purposes, including the expansion
of our sales and marketing activities. In addition, we will use a portion of the
proceeds to acquire and invest in tower assets, tower companies and
complementary businesses.
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CAPITALIZATION
The following table sets forth our cash and capitalization as of December
31, 1999:
- on an actual basis; and
- on an as adjusted basis to give effect to (1) our public offering of
common stock in February 2000 and the conversion upon the closing of that
offering of all outstanding shares of preferred stock, and (2) the
offering of the new notes.
This information should be read in conjunction with our financial
statements and related notes to included elsewhere in this prospectus.
<TABLE>
<CAPTION>
AS OF
DECEMBER 31, 1999
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................... $ 37,778 $ 934,030
========== ==========
Long-term debt:
Credit facility........................................... $ 200,000 $ 200,000
12% senior discount notes due 2008........................ 149,137 149,137
11 1/4% senior discount notes due 2009.................... 367,114 367,114
10 3/4% senior notes due 2010............................. -- 200,000
12 7/8% senior discount notes due 2010.................... -- 299,974
Other debt................................................ 2,527 2,527
---------- ----------
Total long-term debt................................... 718,778 1,218,752
---------- ----------
Shareholders' equity:
Series A convertible preferred stock, $0.001 par value,
3,462,830 shares authorized, 3,462,830 shares
outstanding, actual.................................... 10,000 --
Series B convertible preferred stock, $0.001 par value,
7,000,000 shares authorized, 7,000,000 shares
outstanding, actual.................................... 28,000 --
Series C convertible preferred stock, $0.001 par value,
60,286,795 shares authorized, 60,286,795 shares
outstanding, actual.................................... 301,494 --
Common stock, $0.001 par value, 300,000,000 shares
authorized, 20,191,604 shares outstanding, actual and
116,586,229 shares outstanding, as adjusted............ 20 117
Additional paid-in capital................................ 230,546 981,220
Accumulated other comprehensive income.................... 192 192
Accumulated deficit....................................... (112,496) (112,496)
---------- ----------
Total shareholders' equity............................. 457,756 869,033
---------- ----------
Total capitalization................................. $1,176,534 $2,087,785
========== ==========
</TABLE>
20
<PAGE> 24
UNAUDITED PRO FORMA FINANCIAL DATA
GENERAL
The unaudited pro forma financial data are based on the historical
financial statements of SpectraSite and Westower and the adjustments described
in the accompanying notes. The unaudited pro forma financial data do not purport
to represent what SpectraSite's, Westower's or the combined entity's financial
position or results of operations would actually have been if the transactions
had in fact occurred on the dates indicated and are not necessarily
representative of SpectraSite's financial position or results of operations at
any future date or for any future period. The unaudited pro forma consolidated
financial data should be read in conjunction with "Selected Historical 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.
SPECTRASITE
The following unaudited pro forma consolidated financial data present both
the pre-merger and post-merger unaudited pro forma consolidated statements of
operations of SpectraSite for the year ended December 31, 1999. The SpectraSite
pro forma column and the Westower pro forma column presented in the post-merger
SpectraSite unaudited pro forma consolidated statement of operations for the
year ended December 31, 1999 are derived from the pre-merger SpectraSite and
Westower pro forma consolidated statements of operations for the corresponding
periods. The unaudited pro forma consolidated statement of operations data give
effect to the following transactions as if they had occurred on January 1, 1999:
- the acquisition of 2,000 communications towers from Nextel, the leaseback
of antenna space by Nextel and SpectraSite's exclusive agreement to
acquire or construct 1,700 additional sites for Nextel;
- the issuance and sale of Holdings' 11 1/4% senior discount notes due
2009;
- initial borrowings under SpectraSite's credit facility; and
- the consummation of the Westower merger.
Certain of the data presented in the "Nextel" column to the unaudited pro
forma statement of operations of SpectraSite are estimates provided by Nextel.
None of SpectraSite's independent accountants, Nextel's independent accountants
or Westower's independent accountants have audited or otherwise tested this
data.
The acquisition of tower assets from Nextel and the leaseback of antenna
space by Nextel are presented as if the purchase of assets had occurred on
January 1, 1999. Adjustments for revenues are based on the terms of the master
site lease agreement and on historical co-location revenues. Adjustments for
costs of operations consist of direct operating expenses, which include ground
lease payments, historical routine maintenance costs and property taxes
associated with the towers. Depreciation expense is straight-line depreciation
of the aggregate cost of the towers. Ground leases are non-cancelable operating
leases, generally for terms of five years and include options for renewal, and
pro forma ground lease expense is based on executed ground leases. Nextel has
leased space on each of the 2,000 towers we acquired, primarily for five-year
terms with options for renewal.
21
<PAGE> 25
The pro forma minimum ground lease expenses and minimum rental income for
these leases assuming the Nextel transaction occurred and the related leases
commenced January 1, 1999 are as follows:
<TABLE>
<CAPTION>
GROUND LEASE RENTAL
EXPENSE INCOME
------------ --------
(IN THOUSANDS)
<S> <C> <C>
1999............................... $17,648 $ 40,766
2000............................... 17,648 40,766
2001............................... 17,648 40,766
2002............................... 17,648 40,766
2003............................... 17,648 40,766
------- --------
Total............................ $88,240 $203,830
======= ========
</TABLE>
WESTOWER
The following unaudited pro forma consolidated financial data of Westower
present the unaudited pro forma consolidated statement of operations of Westower
for the period from January 1, 1999 through September 2, 1999, the date on which
SpectraSite acquired Westower.
This statement gives effect to the acquisition of communications towers
from Koch Industries, Inc. and its affiliates, which occurred in February 1999,
as if this acquisition occurred on January 1, 1999. In addition to the above
acquisition, from January 1 through September 2, 1999, Westower acquired Cypress
Real Estate Services, Inc. and Telecommunications R. David. These acquisitions,
which are included in the historical financial statements of Westower, were not
considered significant transactions, individually or in the aggregate, and
therefore, were not included in the unaudited pro forma consolidated statement
of operations of Westower.
Adjustments for revenues are based on the executed tenant lease terms for
the Koch towers. Adjustments for costs of operations consist of direct operating
expenses, which include ground lease payments, estimated routine maintenance
costs, property taxes and insurance associated with the towers. Depreciation
expense is straight-line depreciation of the aggregate cost of $17.0 million.
The Koch ground leases are non-cancelable operating leases for a term of 49
years, and pro forma ground lease expense is based on executed ground leases.
Koch has leased space on these towers for a ten-year term with options for
renewal. The pro forma minimum ground lease expense and minimum rental income
for these leases assuming the transaction occurred and the related leases
commenced January 1, 1999 are as follows:
<TABLE>
<CAPTION>
GROUND LEASE RENTAL
EXPENSE INCOME
------------ -------
(IN THOUSANDS)
<S> <C> <C>
1999................................ $ 439 $ 1,364
2000................................ 439 1,364
2001................................ 439 1,364
2002................................ 439 1,364
2003................................ 439 1,364
Thereafter.......................... 19,322 6,824
------- -------
Total............................. $21,517 $13,644
======= =======
</TABLE>
22
<PAGE> 26
PRE-MERGER SPECTRASITE HOLDINGS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRE-MERGER
SPECTRASITE
HISTORICAL NEXTEL PRO FORMA
---------- -------- -----------
<S> <C> <C> <C>
Revenues:
Site leasing........................................ $ 46,515 $ 14,954(a) $ 61,469
Network services.................................... 53,570 -- 53,570
-------- -------- ---------
Total revenues........................................ 100,085 14,954 115,039
-------- -------- ---------
Operating expenses:
Costs of operations:
Site leasing..................................... 17,825 6,913(b) 24,738
Network services................................. 36,489 -- 36,489
Selling, general and administrative expenses........ 38,182 --(c) 38,182
Depreciation and amortization....................... 37,976 11,808(d) 49,784
Restructuring and non-recurring charges............. 7,727 -- 7,727
-------- -------- ---------
Total operating expenses.............................. 138,199 18,721 156,920
-------- -------- ---------
Operating loss........................................ (38,114) (3,767) (41,881)
-------- -------- ---------
Other income (expense):
Interest income..................................... 8,951 -- 8,951
Interest expense.................................... (67,513) (20,554)(e) (88,067)
Other income (expense).............................. (424) -- (424)
-------- -------- ---------
Total other income (expense)..................... (58,986) (20,554) (79,540)
-------- -------- ---------
Loss before income taxes.............................. (97,100) (24,321) (121,421)
Income tax expense.................................... 568 -- 568
-------- -------- ---------
Net loss.............................................. $(97,668) $(24,321) $(121,989)
======== ======== =========
Net loss.............................................. $(97,668)
Accretion of redemption value of preferred stock...... (760)
--------
Net loss applicable to common shareholders............ $(98,428)
========
Net loss per share:
Basic and diluted................................ $ (12.48)
========
Weighted average number of shares of common stock
outstanding:
Basic and diluted................................ 7,886
========
</TABLE>
See accompanying notes to unaudited pro forma consolidated statement of
operations.
23
<PAGE> 27
PRE-MERGER SPECTRASITE HOLDINGS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS)
(a) Consists of $2,611 of historical co-location revenues received by
Nextel prior to the acquisition, which are based on fixed payment lease
terms. This information was provided to us by Nextel. Also consists of
$12,343 of additional revenues to be recognized by SpectraSite under the
terms of the Nextel master site lease agreement.
(b) Reflects certain direct operating expenses, primarily the cost of
executed ground leases, historical routine maintenance and property taxes
associated with the towers, paid by Nextel prior to the acquisition.
(c) SpectraSite has incurred incremental operating expenses as a
result of the Nextel tower acquisition. Such incremental expenses are
estimated to have been approximately $1,500 per month. These incremental
operating expenses are based upon management's estimates rather than on any
contractual obligation; as such, these amounts have not been presented as
adjustments in the accompanying pro forma financial statements.
(d) Reflects the depreciation of the acquired towers calculated on a
straight-line basis over 15 years.
(e) Reflects adjustment to interest expense as if SpectraSite had
issued its 11 1/4% senior discount notes due 2009 and had entered into the
credit facility on January 1, 1999 as follows:
<TABLE>
<S> <C>
PRO FORMA INTEREST EXPENSE:
Interest on 2009 notes at 11 1/4%................... $13,794
Interest on $150,000 term loan...................... 3,964
Amortization of debt issuance costs................. 1,626
Commitment fees on unused portion of credit
facility.......................................... 1,170
-------
Total adjustment.................................... $20,554
=======
</TABLE>
24
<PAGE> 28
WESTOWER CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JANUARY 1, 1999 THROUGH SEPTEMBER 2, 1999
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL KOCH WESTOWER
WESTOWER ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
Revenues:
Site leasing..................................... $ 1,649 $ 227(a) $ 1,876
Network services................................. 62,002 -- 62,002
------- ----- -------
Total revenues................................... 63,651 227 63,878
------- ----- -------
Operating expenses:
Costs of operations:
Site leasing.................................. 928 123(b) 1,051
Network services.............................. 43,943 -- 43,943
Selling, general and administrative expenses..... 18,439 -- 18,439
Depreciation and amortization.................... 2,920 142(c) 3,062
Restructuring and non-recurring charges.......... 4,629 -- 4,629
------- ----- -------
Total operating expenses........................... 70,859 265 71,124
------- ----- -------
Operating loss..................................... (7,208) (38) (7,246)
------- ----- -------
Other income (expense):
Interest income.................................. 151 -- 151
Interest expense................................. (2,317) (213)(d) (2,530)
Other income (expense)........................... 154 -- 154
------- ----- -------
Total other income (expense).................. (2,012) (213) (2,225)
------- ----- -------
Loss before income taxes........................... (9,220) (251) (9,471)
Income tax expense................................. 223 (100)(e) 123
------- ----- -------
Net loss........................................... $(9,443) $(151) $(9,594)
======= ===== =======
Net loss per share:
Basic and diluted................................ $ (1.10)
=======
Weighted average number of shares of common stock
outstanding:
Basic and diluted................................ 8,562
=======
</TABLE>
See accompanying notes to unaudited pro forma consolidated statement of
operations.
25
<PAGE> 29
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JANUARY 1, 1999 THROUGH SEPTEMBER 2, 1999
(a) Consists of additional revenues to be recognized by Westower in
connection with site lease agreements with Koch.
(b) Reflects certain direct operating expenses, primarily the cost of
executed ground leases, estimated routine maintenance, property taxes and
insurance associated with the towers.
(c) Reflects the depreciation of the acquired towers from Koch calculated
on a straight-line basis over 20 years.
(d) Reflects adjustment to interest expense related to additional
borrowings under Westower's credit facility to acquire the Koch towers, based on
the credit facility's approximate interest rate of 7.5%.
(e) Reflects income tax benefit for the Koch tower operating results at
Westower's estimated tax rate of 40%.
26
<PAGE> 30
POST-MERGER SPECTRASITE HOLDINGS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
POST-MERGER
SPECTRASITE WESTOWER MERGER SPECTRASITE
PRO FORMA PRO FORMA ADJUSTMENTS PRO FORMA
----------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Site leasing..................... $ 61,469 $ 1,876 $ -- $ 63,345
Network services................. 53,570 62,002 (1,449)(a) 114,123
--------- ------- ------- ---------
Total revenues..................... 115,039 63,878 (1,449) 177,468
--------- ------- ------- ---------
Operating expenses:
Costs of operations:
Site leasing.................. 24,738 1,051 -- 25,789
Network services.............. 36,489 43,943 (1,014)(a) 79,418
Selling, general and
administrative expenses....... 38,182 18,439 -- 56,621
Depreciation and amortization.... 49,784 3,062 9,577(b) 61,972
(451)(c)
Restructuring and non-recurring
charges....................... 7,727 4,629 (4,629)(d) 7,727
--------- ------- ------- ---------
Total operating expenses........... 156,920 71,124 3,483 231,527
--------- ------- ------- ---------
Operating loss..................... (41,881) (7,246) (4,932) (54,059)
--------- ------- ------- ---------
Other income (expense):
Interest income.................. 8,951 151 (1,466)(e) 7,636
Interest expense................. (88,067) (2,530) 2,052(f) (88,545)
Other income (expense)........... (424) 154 -- (270)
--------- ------- ------- ---------
Total other income
(expense)................... (79,540) (2,225) 586 (81,179)
--------- ------- ------- ---------
Loss before income taxes........... (121,421) (9,471) (4,346) (135,238)
Income tax expense................. 568 123 -- 691
--------- ------- ------- ---------
Net loss........................... $(121,989) $(9,594) $(4,346) $(135,929)
========= ======= ======= =========
Net loss per share:
Basic and diluted................ $ 6.73(g)
=========
Weighted average number of shares
of common stock outstanding:
Basic and diluted................ 20,192
=========
</TABLE>
See accompanying notes to unaudited pro forma consolidated statement of
operations.
27
<PAGE> 31
POST-MERGER SPECTRASITE HOLDINGS, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS)
(a) Reflects the elimination of intercompany site construction revenues
and costs of site construction for towers built by Westower for SpectraSite
during the period from January 1 through September 2, 1999.
(b) Reflects amortization of goodwill as if the merger of Westower and
SpectraSite had occurred on January 1, 1999. Goodwill is amortized over 15
years.
(c) Reflects adjustments to eliminate amortization of historical goodwill
of Westower of $1,062 and to convert Westower tower depreciation from 20 years
to 15 years, increasing expense by $611.
(d) Reflects the elimination of certain non-recurring charges resulting
directly from the transaction which were incurred by Westower prior to its
acquisition by Spectrasite.
(e) Reflects an adjustment to eliminate interest income as if SpectraSite
had used cash-on-hand to repay Westower's outstanding indebtedness.
(f) Reflects adjustments to eliminate interest expense as if Westower's
credit facility and its $15,000 convertible note from BET Associates were paid
in full on January 1, 1999.
(g) SpectraSite's earnings per share for the year ended December 31, 1999
reflects the adoption of Statement of Financial Accounting Standards No. 128,
"Earnings Per Share", which requires companies to compute earnings per share
under two different methods, basic and diluted. The weighted average common
shares outstanding at December 31, 1999 reflects the issuance of 15.5 million
shares of SpectraSite common stock in exchange for all of the outstanding shares
of Westower common stock.
If SpectraSite had net income during this period, diluted earnings per
share would have included potential common shares related to its convertible
preferred stock and outstanding options. These potential common shares were not
included in the diluted earnings per share calculation for the year ended
December 31, 1999 because the effect would have been antidilutive. In connection
with the Nextel tower acquisition, provisions for dividends and redemption were
eliminated with respect to Holdings' Series A and Series B preferred stock.
28
<PAGE> 32
SELECTED HISTORICAL FINANCIAL DATA
The following table sets forth summary historical financial data derived
from our consolidated financial statements, as of and for:
- the year ended December 31, 1996;
- the period from January 1, 1997 to May 12, 1997;
- the period from SpectraSite's inception on April 25, 1997 to December 31,
1997;
- the year ended December 31, 1998; and
- the year ended December 31, 1999.
The information set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our consolidated financial statements and related notes.
29
<PAGE> 33
<TABLE>
<CAPTION>
TELESITE (PREDECESSOR) SPECTRASITE SPECTRASITE
------------------------- ------------ ---------------------
JANUARY 1, APRIL 25, TELESITE & YEAR ENDED
YEAR ENDED 1997- 1997- SPECTRASITE DECEMBER 31,
DECEMBER 31, MAY 12, DECEMBER 31, COMBINED ---------------------
1996 1997 1997 1997 1998 1999
------------ ---------- ------------ ----------- -------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Site leasing............................. $ -- $ -- $ -- $ -- $ 656 $ 46,515
Network services......................... 8,841 1,926 5,002 6,928 8,142 53,570
------ ------ ------- ------- -------- ----------
Total revenues............................. 8,841 1,926 5,002 6,928 8,798 100,085
------ ------ ------- ------- -------- ----------
Operating expenses:
Costs of operations (excluding
depreciation and amortization expense):
Site leasing........................... -- -- -- -- 299 17,825
Network services....................... 2,255 595 1,120 1,715 2,492 36,489
Selling, general and administrative
expenses............................... 4,256 1,742 7,390 9,132 9,690 38,182
Depreciation and amortization expense.... 91 56 489 545 1,268 37,976
Restructuring and non-recurring
charges................................ -- -- -- -- -- 7,727
------ ------ ------- ------- -------- ----------
Total operating expenses................... 6,602 2,393 8,999 11,392 13,749 138,199
------ ------ ------- ------- -------- ----------
Operating income (loss).................... $2,239 $ (467) $(3,997) $(4,464) $ (4,951) $ (38,114)
====== ====== ======= ======= ======== ==========
Net income(loss)........................... $2,289 $ (503) $(3,890) $(4,393) $ (9,079) $ (97,668)
Net income (loss) applicable to common
shareholders............................. 2,289 (503) (4,390) (4,893) (11,235) (98,428)
OTHER DATA:
Net cash provided by (used in) operating
activities............................... $1,109 $ (71) $ 223 $ 152 $ (2,347) $ 17,555
Net cash provided by (used in) investing
activities............................... (853) (322) (7,178) (7,500) (45,002) (813,225)
Net cash provided by (used in) financing
activities............................... (266) 390 9,189 9,579 144,663 733,900
EBITDA(a).................................. 2,330 (411) (3,508) (3,919) (3,683) 7,589
Capital expenditures(b).................... 498 64 850 914 26,598 644,778
Ratio of earnings to fixed charges(c)...... 23.2x -- -- -- -- --
SELECTED OPERATING DATA (AT END OF PERIOD):
Number of owned towers............................................................... 5 106 2,765
BALANCE SHEET DATA (AT END OF PERIOD):
Cash, cash equivalents and short term investments.................................... $ 2,234 $114,962 $ 37,778
Total assets......................................................................... 13,642 161,946 1,219,953
Total long-term debt................................................................. 2,331 132,913 718,778
Total shareholders' (deficiency) equity.............................................. (1,898) (14,067) 457,756
</TABLE>
- ---------------
(a) EBITDA consists of operating income (loss) before depreciation and
amortization expense and restructuring and non-recurring charges. EBITDA is
provided because it is a measure commonly used in the communications site
industry as a measure of a company's operating performance. 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. SpectraSite believes that EBITDA can assist in comparing company
performance on a consistent basis without regard to depreciation and
amortization expense, which may vary significantly depending on accounting
methods where acquisitions are involved or non-operating factors such as
historical cost bases. EBITDA presented in the table is consistent with
EBITDA calculated under the indentures governing SpectraSite's 2008 notes,
its 2009 notes and the new notes.
(b) 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.
(c) The ratio of earnings to fixed charges is computed by dividing income before
taxes and fixed charges other than capitalized interest by fixed charges.
Fixed charges consist of interest charges, amortization of debt expense and
discount related to indebtedness, whether expensed or capitalized, and that
portion of rental expense SpectraSite believed to be representative of
interest (estimated to be one-third of such expense). For all periods other
than the year ended December 31, 1996, earnings were not sufficient to cover
fixed charges. For the year ended December 31, 1999, after giving effect to
the Nextel tower acquisition and the related financing transactions and the
consummation of the Westower merger as if they had occurred on January 1,
1999, earnings would have been insufficient to cover fixed charges by $136.3
million.
30
<PAGE> 34
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BUSINESS OVERVIEW
SpectraSite's primary focus is on the ownership of multi-tenant towers and
leasing of antenna space on such towers. As of December 31, 1999, we had 2,765
towers in service, as compared to 106 towers at December 31, 1998. As a result
of our limited operating history and primary focus on tower ownership and
leasing, management believes that our results of operations for the period ended
December 31, 1997 and for the years ended December 31, 1998 and 1999 are not
indicative of our results of operations in the future. We previously operated in
one business segment. As a result of the Nextel tower acquisition and the
Westower merger, we now operate in two business segments, site leasing and
network services. For further details about our business segments, refer to Note
11 to our consolidated financial statements.
Historically, we have derived most of our revenues from network services
activities. As a result of recent acquisitions, principally the Nextel and
Westower transactions, we expect that network services and antenna site leasing
will generate most of our revenues. On a pro forma basis, after giving effect to
the Nextel tower acquisition, the Westower merger and certain other transactions
described in "Unaudited Pro Forma Financial Data," site leasing and network
services would have represented 36% and 64% of our revenues, respectively, for
the year ended December 31, 1999. We believe that our site leasing business will
continue to represent a substantial portion of our revenues and will continue to
grow as we increase our network of towers.
Our two largest expense line items have been depreciation and amortization
and selling, general and administrative expense. Depreciation expense primarily
relates to our towers, which we depreciate over 15 years. In 1999, amortization
expense is primarily due to goodwill associated with the Westower merger. On a
pro forma basis, after giving effect to the Nextel tower acquisition, the
Westower merger and certain other transactions described in "Unaudited Pro Forma
Financial Data," depreciation and amortization expense would have represented
35% of revenues for the year ended December 31, 1999. We experienced a
significant increase in selling, general and administrative expense in 1999 as
we integrated Westower's operations and increased our employee base to market
and manage the 2,000 Nextel towers and build towers for Nextel under the master
site commitment agreement.
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999 COMPARED TO THE YEAR ENDED DECEMBER 31, 1998
Consolidated revenues for the year ended December 31, 1999 were $100.1
million, an increase of $91.3 million from the year ended December 31, 1998.
Revenues from site leasing increased to $46.5 million for the year ended
December 31, 1999 from $0.7 million for the year ended December 31, 1998,
primarily as a result of revenues derived from 2,000 communications towers which
we acquired from Nextel in April 1999. We owned 2,765 communications towers at
December 31, 1999 compared to 106 communications towers at December 31, 1998.
Revenues from network services increased to $53.6 million for the year
ended December 31, 1999 compared to $8.1 million for the year ended December 31,
1998, primarily as a result of the acquisition of Westower in September 1999. In
September 1999, we announced that we would no longer directly provide site
acquisition services. Revenues from site acquisition activities were $7.2
million and $8.1 million in the years ended December 31, 1999 and 1998,
respectively.
Costs of operations increased to $54.3 million for the year ended December
31, 1999 from $2.8 million for the year ended December 31, 1998. The increase in
costs was attributable to operating costs of the 2,000 communications towers
purchased from Nextel in April 1999 and the acquisition of Westower in September
1999. Costs of operations for site leasing as a percentage of site leasing
revenues decreased to 38.3% for the year ended December 31, 1999 from 45.6% for
the year ended December 31, 1998 primarily due to revenues generated from the
acquisition of towers from Nextel and co-location revenues on those towers. As
our site leasing operations mature, additional tenants on a tower will generate
31
<PAGE> 35
decreases in costs of operations for site leasing as a percentage of site
leasing revenues and increases in cash flow because a significant proportion of
tower operating costs are fixed and do not increase with additional tenants.
Costs of operations for network services as a percentage of network services
revenues increased to 68.1% for the year ended December 31, 1999 from 30.6% for
the year ended December 31, 1998. This increase is due to construction
activities associated with Westower's operations which have higher levels of
direct costs than our historical site acquisition activities.
Selling, general and administrative expenses increased to $38.2 million for
the year ended December 31, 1999 from $9.7 million for the year ended December
31, 1998. The increase is a result of expenses related to additional corporate
overhead and field operations implemented to manage and operate the growth in
the ongoing activities of SpectraSite and the acquisition of Westower.
Depreciation and amortization expense increased to $38.0 million for the
year ended December 31, 1999 from $1.3 million for the year ended December 31,
1998, primarily as a result of the increased depreciation from the towers we
acquired or constructed and amortization of goodwill related to the Westower
acquisition.
For the year ended December 31, 1999, we recorded restructuring and
non-recurring charges of $7.7 million. In September 1999, we announced that we
would no longer directly provide site acquisition services. As a result, we
recorded restructuring charges of $7.1 million, of which $6.2 million related to
the write-off of goodwill associated with the purchase of Telesite Services, LLC
and $0.9 million related to costs of employee severance. In March 1999,
SpectraSite announced that it would relocate its marketing and administrative
operations from Little Rock, Arkansas and Birmingham, Alabama to its corporate
headquarters in Cary, North Carolina. As a result, we recorded a non-recurring
charge of $0.6 million for employee termination and other costs related to the
relocation of these activities.
As a result of the factors discussed above, our loss from operations was
$38.1 million for the year ended December 31, 1999 compared to $5.0 million for
the year ended December 31, 1998.
Net interest expense increased to $58.6 million during the year ended
December 31, 1999 from $4.6 million for the year ended December 31, 1998,
reflecting additional interest expense due to the issuance of our 12% senior
discount notes due 2008 in June 1998 and our 11 1/4% senior discount notes due
2009 in April 1999, as well as borrowings under our credit facility in April
1999.
YEAR ENDED DECEMBER 31, 1998 COMPARED TO THE COMBINED RESULTS FOR THE YEAR
ENDED DECEMBER 31, 1997
The following is a discussion of the financial condition and results of
operations of SpectraSite for the year ended December 31, 1998 and the year
ended December 31, 1997, which consists of the period from April 25, 1997
through December 31, 1997 and Telesite's results of operations for the period
from January 1, 1997 through May 12, 1997.
Revenues increased to $8.8 million for the year ended December 31, 1998
from $6.9 million for the year ended December 31, 1997 due to the initiation of
site leasing activity and an increase in the number and size of site development
services projects.
Selling, general and administrative expenses, including depreciation
expense, increased to $11.0 million for the year ended December 31, 1998 from
$9.7 million for the year ended December 31, 1997. The increase is a result of
expenses related to additional corporate overhead to manage and operate the
ongoing activities of SpectraSite. Marketing expenses related to tower
development activities as well as the site acquisition operations also
contributed to the increase in expenses. Telesite did not actively market its
services, relying primarily on its reputation in the industry and customer
referrals to generate revenues. To support our entry into tower development and
leasing, we have established a dedicated marketing effort which promotes tower
development and leasing as well as site acquisition services. Amortization of
goodwill increased to approximately $0.6 million in the year ended December 31,
1998 compared to approximately $0.3 million in the year ended December 31, 1997
as a result of acquisitions.
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<PAGE> 36
As a result of the factors discussed above, our operating loss was $5.0
million for the year ended December 31, 1998, compared to $4.5 million for the
year ended December 31, 1997.
Other income, which consists primarily of gain on sales of assets and
equity in earnings of affiliates, increased to approximately $0.5 million for
the year ended December 31, 1998 from approximately $0.1 million for the year
ended December 31, 1997. The increase is a result of a gain on the sale of
assets in connection with the disposal of Metrosite during the first quarter of
1998 of approximately $0.5 million. During the year ended December 31, 1997, we
recognized approximately $0.2 million as equity earnings of Communication
Management Specialists. We disposed of our interest in Communication Management
Specialists during the second quarter of 1998 and did not recognize any equity
in the earnings of this affiliate during 1998.
COMBINED RESULTS FOR THE YEAR ENDED DECEMBER 31, 1997 COMPARED TO
TELESITE'S RESULTS FOR THE YEAR ENDED DECEMBER 31, 1996
The following is a discussion of the financial condition and results of
operations of SpectraSite for the year ended December 31, 1997, which consists
of and for the period from April 25, 1997 through December 31, 1997 and
Telesite's results of operations for the period from January 1, 1997 through May
12, 1997, and of Telesite for the year ended December 31, 1996.
Total revenues decreased to $6.9 million for the year ended December 31,
1997 from $8.8 million for the year ended December 31, 1996 due primarily to the
decreased demand for site development services from more established personal
communications services 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 fact that holders
of certain more recently issued licenses had not yet commenced construction of
tower networks in their respective markets.
Selling, general and administrative expenses increased to $9.1 million for
the year ended December 31, 1997 from $4.3 million for the year ended December
31, 1996. The increase is a result of the expenses related to management of the
ongoing activities of SpectraSite, expenses related to the implementation of
tower development and marketing activities, one-time non-cash charges of
approximately $2.6 million as a result of the formation of SpectraSite,
amortization of goodwill of approximately $0.3 million in connection with our
acquisition of Telesite and expenses incurred in connection with the operations
of Metrosite. We sold our interest in Metrosite during early 1998. We anticipate
that in the future costs related to tower development activities will be
capitalized as part of the cost of the towers.
Operating loss was $4.5 million for the year ended December 31, 1997
compared to $2.2 million of operating income for the year ended December 31,
1996. The change is primarily a result of the decline in revenues and the
increase in selling, general and administrative expenses attributable to the
commencement of operations of SpectraSite.
Other income, which consists primarily of equity in earnings of affiliates,
was approximately $0.1 million for the year ended December 31, 1997 and for the
year ended December 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
SpectraSite Holdings is a holding company whose only significant asset is
the outstanding capital stock of its subsidiary, SpectraSite Communications. Our
only source of cash to pay interest on and principal of our indebtedness is
distributions from SpectraSite Communications. Prior to July 15, 2003, interest
expense on the 2008 notes will consist solely of non-cash accretion of original
issue discount and the 2008 notes will not require annual cash interest
payments. After such time, the 2008 notes will have accreted to approximately
$225.2 million and will require semi-annual cash interest payments of $13.5
million. The 2008 notes mature on July 15, 2008. Similarly, prior to October 15,
2004, interest expense on the 2009 notes will consist solely of non-cash
accretion of original issue discount and the 2009 notes will not require annual
cash interest payments. After such time, the 2009 notes will have accreted to
approximately $586.8 million and will require semi-annual cash interest payments
of $33.0 million. The
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<PAGE> 37
2009 notes mature on April 15, 2009. Furthermore, our credit facility provides
for periodic principal and interest payments.
Our ability to fund capital expenditures, make scheduled payments of
principal of, or pay interest on, our debt obligations, and our ability to
refinance any such debt obligations, including the 2008 notes, the 2009 notes
and the new notes, will depend on our future performance, which, to a certain
extent is subject to general economic, financial, competitive, legislative,
regulatory and other factors that are beyond our control. Our business strategy
contemplates substantial capital expenditures, including an expected approximate
amount of $200 million during the first half of 2000, primarily to fund the
construction and acquisition of additional communications towers. Management
believes that cash flow from operations, available cash as of December 31, 1999,
net proceeds received from our public offering of common stock in February 2000,
net proceeds of our offering of the new notes and anticipated available
borrowings under the credit facility will be sufficient to fund our capital
expenditures for the foreseeable future. However, if acquisitions or other
opportunities present themselves more rapidly than we currently anticipate or if
our estimates prove inaccurate, we may seek additional sources of debt or equity
capital prior to the end of 2000 or reduce the scope of tower construction and
acquisition activity. We cannot assure you that we will generate sufficient cash
flow from operations or that future borrowings or equity or debt financings will
be available on terms acceptable to us, in amounts sufficient to service our
indebtedness and make anticipated capital expenditures.
CASH FLOWS
For the year ended December 31, 1999, cash flows provided by operating
activities were $17.6 million as compared to $2.3 million used in operating
activities in the year ended December 31, 1998. The change is primarily
attributable to the favorable cash flows generated from communications tower
acquisitions in 1999.
For the year ended December 31, 1999, cash flows used in investing
activities were $813.2 million compared to $45.0 million for the year ended
December 31, 1998. In the year ended December 31, 1999, SpectraSite invested
$692.8 million in purchases of property and equipment and deposits on future
acquisitions, primarily related to the acquisition of communication towers from
Nextel. In addition, we used $128.4 million to acquire Westower in September
1999 and Stainless and Doty-Moore in December 1999. These investments were
partially offset by $15.4 million in maturities of short-term investments.
In the year ended December 31, 1999, cash flows provided by financing
activities were $733.9 million as compared to $144.7 million in the year ended
December 31, 1998. The increase in cash provided by financing activities was
attributable to the proceeds from the sales of Series C preferred stock and the
2009 notes, as well as proceeds from borrowings under the credit facility.
Net cash used in operating activities during the year ended December 31,
1998 was $2.3 million compared to $0.2 million provided by operating activities
during the comparable period in 1997. The increase in cash used in operating
activities was primarily attributable to an increase in accounts receivable
resulting from the timing of billings related to site development services and
the net loss incurred during the year. Net cash used for investing for the year
ended December 31, 1998 was $45.0 million compared to $7.5 million for the year
ended December 31, 1997. The cash used for investing activities during the year
ended December 31, 1998 was primarily the result of the investment of unused
proceeds from the sale of the 2008 notes in short-term investments, costs
associated with tower construction, the acquisition of towers from Airadigm
Communications, Inc. and the acquisition of GlobalComm. The cash used for
investing activities during the year ended December 31, 1997 primarily related
to the acquisition of Telesite. Net cash provided by financing activities for
the year ended December 31, 1998 was $144.7 million compared to $9.6 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 2008 notes.
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<PAGE> 38
MERGERS AND ACQUISITIONS
We acquired 45 communications towers and certain related assets from
Airadigm for an aggregate purchase price of $11.25 million in 1998 and 1999.
Airadigm is the anchor tenant on 48 of our towers and has filed for protection
under Chapter 11 of the U.S. Bankruptcy Code. We cannot predict the impact of
this proceeding on our future results of operations or financial condition.
On April 20, 1999, we acquired 2,000 communications towers from Nextel in a
merger transaction. All the sites were then leased back to Nextel under a master
lease agreement. In addition, in connection with this transaction, Nextel and
its controlled affiliates agreed to offer SpectraSite certain exclusive
opportunities relating to the construction or purchase of an additional 1,700
sites. Some of these sites may in the future be leased to Nextel Partners
Operating Corp. instead of Nextel. Nextel Partners, Inc., the parent of Nextel
Partners Operating Corp., is an entity in which Nextel has a minority equity
interest. In connection with this acquisition, we paid $560.0 million in cash
and issued 14.0 million shares of Series C preferred stock, valued at $70.0
million, to Nextel.
The following table sets forth the sources and uses of funds for the Nextel
tower acquisition in thousands of dollars:
<TABLE>
<S> <C>
SOURCES OF FUNDS:
Credit facility..................................... $150,000
11 1/4% senior discount notes due 2009.............. 340,004
Series C preferred stock issued to Nextel........... 70,000
Series C preferred stock sold to the Series C
investors......................................... 231,434
--------
Total sources..................................... $791,438
========
USES OF FUNDS:
Cash paid to Nextel................................. $560,000
Series C preferred stock issued to Nextel........... 70,000
Cash available for general corporate purposes....... 127,688
Estimated fees and expenses......................... 33,750
--------
Total uses........................................ $791,438
========
</TABLE>
On September 2, 1999, we acquired Westower Corporation, a Washington
corporation, in a stock-for-stock merger. In this transaction, Westower
stockholders received 1.81 shares of our common stock, plus cash for any
fractional Westower share, in exchange for each of their shares of Westower
common stock. In connection with the merger, SpectraSite repaid approximately
$70.0 million of Westower indebtedness with cash-on-hand. Westower Corporation
now operates as a wholly-owned subsidiary of SpectraSite Communications, which
in turn is a wholly-owned subsidiary of SpectraSite Holdings.
On September 8, 1999, we acquired a 33% interest in Concourse
Communications Group, LLC for an aggregate purchase price of $2.5 million.
Concourse was established to build certain wireless communications
infrastructures at facilities owned by the Port Authority of New York and New
Jersey, including the Holland and Lincoln Tunnels, World Trade Center Concourse
and New York's three major airports. As part of our investment, we agreed to
provide approximately $14.4 million of working capital and construction
financing to Concourse in the form of secured loans over the next three years.
At December 31, 1999, Concourse owed us $2.9 million under these loans. In
addition, after three years, we have an option to purchase an additional 33%
interest in Concourse, and after six years, we have an option to purchase the
remaining interest in Concourse.
In November 1999, we entered into an agreement to acquire 94 communications
towers from DigiPH PCS, Inc. for $36.0 million in cash. The towers span the
corridor connecting Jackson, Mississippi, Mobile, Alabama and Tallahassee,
Florida. We acquired 61 towers for approximately $23.9 million on December 29,
1999, and we expect to acquire the remaining towers during the first half of
2000.
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<PAGE> 39
On December 30, 1999, we acquired Stainless, Inc., formerly a wholly-owned
subsidiary of Northwest Broadcasting, L.P., for $40.0 million in cash. Stainless
provides engineering, fabrication and other services in connection with the
erection of towers used for television broadcast companies. Also on December 30,
1999, we acquired Doty-Moore Tower Services, Inc., Doty-Moore Equipment Company,
Inc. and Doty Moore RF Services, Inc. for $2.5 million in cash and 500,000
unregistered shares of our common stock. Doty-Moore is a leading source for
broadcast tower construction and technical services. In addition, on January 5,
2000, we acquired Vertical Properties, Inc. in a merger transaction under which
we issued 225,000 unregistered shares of our common stock and repaid outstanding
indebtedness of approximately $2.0 million. Vertical Properties is a broadcast
tower development company formed to meet the needs of broadcasters in secondary
broadcast markets faced with the complexities of converting to digital
technology through site acquisition, tower placement and leasing of antenna
space. On January 28, 2000, we acquired substantially all of the assets of
International Towers Inc. and its subsidiaries, including S&W Communications
Inc. International Towers owns a modern broadcast tower manufacturing facility
and, through S&W Communications, provides integrated services for the erection
of broadcast towers, foundations and multi-tenant transmitter buildings. We paid
$5.5 million and issued an aggregate of 350,000 unregistered shares of our
common stock in connection with this acquisition. We borrowed an additional
$50.0 million under our credit facility in December 1999 to partially fund these
mergers and acquisitions.
On January 5, 2000, we acquired Apex Site Management Holdings, Inc. in a
merger transaction. Apex provides rooftop and in-building access to wireless
carriers. We issued approximately 4.5 million unregistered shares of our common
stock to the stockholders of Apex and approximately 194,000 options to purchase
common stock at an exercise price of $3.58 per share to certain option holders
of Apex at the closing of the merger. In addition, we issued approximately 1.5
million additional shares of common stock into escrow, which shares may be
released to Apex's stockholders six months after this offering based on the
average trading price for our common stock for the 30-day period immediately
preceding the six-month anniversary of this offering. We also used approximately
$6.2 million in cash to repay outstanding indebtedness and other obligations of
Apex in connection with the merger.
On February 17, 2000, we entered into an agreement with AirTouch
Communications and several of its affiliates, under which we agreed to lease or
sublease approximately 430 communications towers for $155.0 million, subject to
adjustment. Under the terms of the agreement and the master sublease which the
parties will enter into at closing, we will manage, maintain and lease the
available space on AirTouch towers covered by the agreement and located
throughout Southern California. AirTouch will pay us an average monthly fee per
site for its cellular, microwave and paging facilities. We also have the right
to lease available tower space to co-location tenants in specified situations.
We also entered into a site marketing agreement with AirTouch to provide
AirTouch with certain tower leasing and marketing services pending the closing
of the master sublease, and we have agreed to enter into a three-year exclusive
build-to-suit agreement with AirTouch in Southern California. Under the terms of
the build-to-suit agreement, we will develop and construct locations for
wireless communications towers on real property designated by AirTouch.
We expect the AirTouch transaction to close in stages, with the initial
closing to occur no later than November 15, 2000, if certain conditions are met.
The initial closing will involve at least 105 towers and each subsequent closing
will involve at least 45 towers, or a smaller number when fewer than 45 towers
remain to be transferred, and the final closing will occur no later than six
months after the initial closing. At each respective closing, we will pay for
the towers included in that closing according to a formula contained in the
master sublease. As partial security for our obligations under the master
sublease, we deposited $23.0 million into escrow.
In March 2000, we signed a letter of intent to acquire 11 broadcast towers
from Pegasus Communications Corporation and to build up to five new digital
television towers in the next 12 months. The purchase price will be a multiple
of tower cash flow and will be payable primarily in shares of our unregistered
common stock. This acquisition is subject to the negotiation of definitive
documents and other
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<PAGE> 40
customary conditions, and although we cannot assure you when or if this
transaction will be consummated, we expect to complete the acquisition in the
second quarter of 2000.
FINANCING TRANSACTIONS
In connection with the Nextel tower acquisition, we privately placed
46,286,795 shares of Holdings' Series C preferred stock for an aggregate
purchase price of $231.4 million. On April 20, 1999, SpectraSite completed the
private offering of $586.8 million aggregate principal amount at maturity of
11 1/4% senior discount notes due 2009. We used a portion of the net proceeds
from these offerings to partially fund the Nextel tower acquisition and to pay
related fees and expenses. We used the remaining proceeds for general corporate
purposes, including the purchase and construction of new towers and selective
acquisitions.
Also on April 20, 1999, we entered into a $500.0 million seven-year credit
facility. We borrowed $150.0 million under this facility at the closing of the
Nextel tower acquisition. We also issued 2.0 million shares of common stock to
various parties as consideration for providing financing commitments related to
the Nextel tower acquisition. We did not utilize these commitments for the
Nextel acquisition primarily because of the success of the 2009 notes offering.
We currently have $300.0 million available under our credit facility to fund new
tower construction or acquisition activity. In addition, as of December 31,
1999, our cash and cash equivalents were $37.8 million.
On September 15, 1999, we completed registered exchange offers for our 2008
notes and our 2009 notes. Under a registration rights agreement with the initial
purchasers of the 2008 notes, we agreed to complete an exchange offer for the
privately placed 2008 notes prior to March 10, 1999. Since we did not complete
this exchange offer prior to March 10, 1999, the interest rate on the 2008 notes
increased by 0.50% per year. This additional interest accrued on the 2008 notes
until we completed the exchange offer, and we paid this interest in cash on
January 15, 2000. Similarly, under a registration rights agreement with the
initial purchasers of the 2009 notes, Holdings agreed to file a registration
statement with the SEC for an exchange offer of registered notes for the
privately placed 2009 notes before July 20, 1999. Since we did not file the 2009
notes exchange offer registration statement before July 20, 1999, the interest
rate on the 2009 notes increased by 0.50% per year. This additional interest
accrued on the 2009 notes until we filed the exchange offer registration
statement on August 12, 1999, and we paid this interest in cash on October 15,
1999.
On February 4, 2000, we completed a public offering of our common stock. We
offered 25,645,000 shares of common stock, including an over-allotment option
exercised by our underwriters. In addition, each share of our preferred stock
converted to a share of common stock upon the closing of the offering. The
number of shares of our common stock outstanding immediately after the offering,
including the 70,749,625 shares issued upon conversion of the preferred stock
and 6,007,996, 225,000 and 350,000 shares issued in connection with our
acquisitions of Apex and Vertical Properties in merger transactions and
substantially all of the assets of International Towers, Inc., was 123,169,225.
We received net proceeds of $411.3 million from the offering, which we intend to
use to fund costs related to the construction and acquisition of towers,
including under the AirTouch agreements, and for general corporate purposes.
INFLATION
Some of our expenses, such as those for marketing, wages and benefits,
generally increase with inflation. However, we do not believe that our financial
results have been, or will be, adversely affected by inflation in a material
way.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS 133
requires that derivative instruments be recognized as either assets or
liabilities in the consolidated balance sheet based on their fair values.
Changes in the fair values of such derivative instruments will be recorded
either in results of operations or
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<PAGE> 41
in other comprehensive income, depending on the intended use of the derivative
instrument. The initial application of SFAS 133 will be reported as the effect
of a change in accounting principle. SFAS 133 is effective for all fiscal years
beginning after June 15, 2000. We have not yet determined the effect that the
adoption of SFAS 133 will have on our consolidated financial statements.
YEAR 2000 COMPLIANCE
We have not experienced any immediate adverse impact from the transition to
the year 2000. However, we cannot assure you that we or our suppliers and
customers have not been affected in a manner that is not yet apparent. In
addition, certain computer programs which were date sensitive to the year 2000
may not process the year 2000 as a leap year, and any negative consequential
effects remain unknown. As a result, we continue to monitor our year 2000
compliance and the year 2000 compliance of our suppliers and customers.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
We use financial instruments, including fixed and variable rate debt, to
finance our operations. The information below summarizes our market risks
associated with debt obligations outstanding as of December 31, 1999. The
following table presents principal cash flow and related weighted average
interest rates by fiscal year of maturity. Variable interest rate obligations
under the credit facility are not included in the table. We have no long-term
variable interest obligations other than borrowings under the credit facility.
<TABLE>
<CAPTION>
EXPECTED MATURITY DATE
----------------------------------------------------------------------------
1999 2000 2001 2002 2003 THEREAFTER TOTAL
-------- -------- -------- -------- -------- ---------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Long-term obligations:
Fixed rate............ $ -- $ -- $ -- $ -- $ -- $516,251 $516,251
Average interest
rate............. -- -- -- -- -- 11.5% 11.5%
</TABLE>
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<PAGE> 42
BUSINESS
OVERVIEW
We are one of the leading providers of outsourced antennae site and network
services to the wireless communications and broadcast industries in the United
States and Canada. Our businesses include the ownership and leasing of antennae
sites on towers, managing rooftop and in-building telecommunications access on
commercial real estate, network planning and deployment and construction of
towers and related wireless facilities. Our customers are leading wireless
communications providers and broadcasters, including Nextel, Sprint PCS, AT&T
Wireless, VoiceStream Communications, Tritel Communications, Teligent, WinStar,
Cox Broadcasting, Clear Channel Communications and Paxson Communications. As of
December 31, 1999, and after giving effect to our acquisition of Apex, we owned
or managed over 15,000 sites, including 2,765 owned towers, in 98 of the top 100
markets in the United States. On February 17, 2000, we agreed to acquire
leasehold or subleasehold interests in 430 communications towers from AirTouch.
The wireless communications industry is growing rapidly and carriers are
making large capital investments to expand their networks. We believe that the
number of wireless communications sites, including towers, is likely to continue
to increase together with the growth in demand for wireless services. This
expected growth in communications sites is the result of several factors,
including:
- the continuing build-out of higher frequency technologies, such as
personal communications services, which have a reduced cell range and
require a more concentrated network of towers than previous wireless
technologies;
- the need to expand the capacity of existing networks;
- the issuance of new wireless network licenses requiring the construction
of new wireless networks; and
- the emergence of new wireless technologies.
As carriers deploy these networks, they are faced with a proliferation in
both the number and type of competitors. Because of this increasingly
competitive environment, carriers must also focus on satisfying customer demand
for enhanced services, seamless and comprehensive coverage, better call quality,
faster data transmission and lower prices.
We believe that as carriers face the increased challenges of expanding
their networks and improving their services, they must allocate their available
capital and resources in the most efficient manner. In particular, carriers are
increasingly outsourcing tower ownership, as well as network planning deployment
and management to independent tower owners like SpectraSite. This outsourcing
allows our customers to focus on their core competencies and to rely on us for
planning and deploying their networks. Our services are designed to improve our
customers' competitive positions through the efficient planning, deployment and
management of their networks.
GROWTH STRATEGY
Our objective is to be the leading independent provider of outsourced
antennae site and network services to the telecommunications and broadcast
industries. Our growth strategy involves the following key elements:
MAXIMIZING THE UTILIZATION OF OUR TOWERS AND MANAGED SITES
We intend to capitalize on the substantial opportunities for revenue and
cash flow growth by maximizing the number of tenants we have on each of our
towers and managed sites. We believe that our strategy of owning clustered
groups of towers and managed sites in major metropolitan markets and providing
our customers with a full range of products and services allows us to deliver
reliable, scalable network solutions and will result in increased co-location on
our towers and managed sites. Since most
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<PAGE> 43
tower costs are fixed, leasing available space on an existing tower results in
minimal additional expenses while generating a larger percentage increase in
tower cash flow. In addition, tenant turnover is low because of the relatively
high cost of antenna relocation. We generally construct towers to accommodate at
least three broadband tenants and have a dedicated sales force which markets
co-location opportunities to wireless communications providers. Our objective is
to use our national tower presence to enable wireless service providers to more
quickly establish wireless coverage in individual and multiple markets.
EXPANDING OUR TOWER PORTFOLIO
We seek to expand our tower portfolio by building new towers for anchor
tenants and by making selective acquisitions of towers. We believe that Nextel's
agreement to lease space on an additional 1,422 towers we own, acquire or
construct for Nextel or other tenants will substantially increase the number of
towers we own and operate. We also continue to pursue attractive network
development opportunities with other wireless service providers. In addition, we
evaluate other tower development opportunities from time to time which we
believe have higher than average co-location opportunities. We intend to
continue to make selective acquisitions in the highly fragmented tower owner and
operator industry. Our strategy is to acquire towers that have some, or all, of
the following criteria:
- underutilized with additional co-location potential;
- favorably located, either individually or in clusters, in large urban
areas and along major transportation corridors; and
- complementary to our existing coverage areas.
We believe there are tower acquisition opportunities currently available
from both wireless service providers and smaller independent tower operators.
Furthermore, we believe that the number of tower opportunities available in the
future is likely to grow as large wireless communications service providers and
smaller independent tower companies continue to divest their tower holdings. 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. In addition to our
acquisition of 2,000 towers from Nextel in April 1999, we continue to seek
partnerships and other strategic arrangements with other major wireless
communications carriers in order to assume ownership of their towers.
EXPANDING THE SUITE OF SERVICES WE OFFER AND PURSUING CROSS-SELLING
OPPORTUNITIES
We believe our ability to provide a package of integrated services, which
have traditionally been offered by multiple subcontractors coordinated by a
carrier's deployment staff, will make us a preferred provider of all outsourced
antennae site and network services. For example, we believe that our leadership
in rooftop and in-building access will give us an advantage across all of our
product offerings as fixed wireless carriers expand their networks and as
wireless telephone and data companies increasingly focus on network deployment
and in-building service. In addition, our leadership in broadcast tower design,
fabrication and construction will give us a competitive advantage as
broadcasters increasingly outsource tower and facilities ownership and
management.
PRODUCTS AND SERVICES
WIRELESS TOWER OWNERSHIP AND LEASING
We are one of the largest independent owners and operators of wireless
communications towers in the United States and Canada. We provide antennae site
leasing services, which primarily involve the leasing of antennae space on our
communications towers to wireless carriers. Each of our towers has an anchor
tenant, and we seek to add several co-location tenants over time. In leasing
antennae space, we generally receive monthly lease payments from customers. Our
customer leases typically 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 communications site.
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The following chart shows the locations of our owned towers as of December
31, 1999:
<TABLE>
<CAPTION>
NUMBER
STATE OF TOWERS
- ----- ---------
<S> <C>
California........... 408
Florida.............. 186
Michigan............. 168
Ohio................. 166
Texas................ 165
Illinois............. 155
Georgia.............. 154
North Carolina....... 130
Louisiana............ 99
Alabama.............. 94
Washington........... 88
Wisconsin............ 85
Tennessee............ 81
</TABLE>
<TABLE>
<CAPTION>
NUMBER
STATE OF TOWERS
- ----- ---------
<S> <C>
Missouri............. 62
Indiana.............. 55
Mississippi.......... 54
Pennsylvania......... 52
South Carolina....... 52
Arizona.............. 48
Massachusetts........ 44
Oregon............... 43
Oklahoma............. 39
Nevada............... 38
Maryland............. 35
Colorado............. 33
</TABLE>
<TABLE>
<CAPTION>
NUMBER
STATE OF TOWERS
- ----- ---------
<S> <C>
New Mexico........... 30
Minnesota............ 25
Utah................. 23
New Jersey........... 19
Virginia............. 18
Kansas............... 17
New York............. 16
Iowa................. 14
Alberta.............. 13
Other................ 56
-----
Total................ 2,765
=====
</TABLE>
In addition to towers we build for Nextel under the master site commitment
agreement and towers we selectively build and acquire, we also expect to expand
our tower portfolio through build-to-suit programs. Under build-to-suit
programs, we utilize our network development capabilities to construct tower
networks 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 that tower network would not exceed a targeted multiple of tower
cash flow after a certain period of time.
In addition to leasing antenna space, we also provide maintenance and
management services at our communication sites. In providing these services to
our customers we use 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, radio frequency emission and
interference issues, signage, structural engineering and tower capacity, tenant
relations and supervision of independent contractors. We hire local independent
contractors to perform routine maintenance functions, such as landscaping, pest
control, snow removal and site access.
WIRELESS ROOFTOP AND IN-BUILDING ACCESS
We are the largest independent provider of rooftop and in-building access
services in the United States. We are the exclusive site manager for
approximately 12,700 diverse real estate properties, with significant access
clusters in New York, Philadelphia, Baltimore/Washington, D.C., Atlanta, New
England, Florida, Western Pennsylvania/Ohio/Indiana, Chicago, Seattle, Southern
California, Texas and St. Louis. A principal attraction of this portion of our
business is the opportunity to develop new sources of revenue and value for
building owners by managing:
- rooftops for transmitting and receiving installations; and
- rooftops, risers and internal telecommunications equipment space for
competitive voice, data and Internet services offered to in-building
tenants.
Wireless communications carriers utilize our managed sites as transmitting
locations, often where there are no existing towers for co-location or where new
towers are difficult to build. Our transmitting tenants encompass a broad array
of wireless communications providers, including personal communications service,
cellular, enhanced specialized mobile radio, specialized mobile radio, wireless
data, two-way radio, microwave, wireless cable and paging companies. As the
largest rooftop and in-building access manager in the United States, we provide
services to the facilities-based (wired and wireless) competitive local exchange
carrier and Internet service provider market. We have executed agreements
allowing these
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<PAGE> 45
carriers access to over 3,000 properties, including agreements with national
providers such as Adelphia Business Solutions, AT&T Local Services, Eureka
Broadband, NEXTLINK, Site Line, Teligent and WinStar, as well as numerous
regional carriers. These access agreements are, to date, predominantly for
office and industrial properties.
Our managed portfolio contains over 3,300 office and industrial properties
encompassing over 375 million square feet. We are engaged by ten of the top
nineteen office real estate investment trusts, based on market capitalization,
in the United States, according to the National Association of Real Estate
Investment Trusts. In most cases, multiple carriers will access a single
property. Our management contracts are generally for a period of three to five
years, and contain renewal periods unless terminated by either party before
renewal or upon an uncured default. Under these contracts, we are engaged as the
exclusive site manager for rooftop management. In most cases, we are also
engaged as the exclusive manager for riser and telecommunications access
management. As the site manager, we are responsible for marketing the properties
as part of our portfolio of potential telecommunications sites, reviewing
existing license agreements, negotiating new license agreements, managing and
enforcing those agreements, supervising installation of equipment by carriers to
ensure, among other things, non-interference with other users, as well as site
billing, collections and contract administration. For these services, we receive
a percentage of occupancy fees, which is higher for the new carriers we add than
for existing carriers. Upon any termination of a contract, unless due to our
default, we are entitled to continue to receive our percentage with respect to
carriers added during the term of our management agreement for so long as they
remain tenants.
NETWORK DESIGN AND DEPLOYMENT SERVICES
We are a leading provider of design and deployment services for wireless
networks. These services include architectural and engineering design, tower
construction, line and antenna installation and site acquisition services. We
offer these services individually and as an integrated package. We believe that
we have a competitive advantage in our ability to provide comprehensive network
development services by eliminating our customers' need to seek services from
different providers.
In providing these network design and deployment services, we have
developed the capability to effectively manage multiple site acquisition and
tower development projects in various locations at the same time. Where
appropriate, we supplement our in-house expertise with a pre-qualified pool of
local contractors and advisors. In addition, we have developed detailed and
standardized site acquisition and construction specifications and procedures
that allow us 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.
Architectural and Engineering Design. Our architecture and engineering
team manages a complex array of electrical, structural and architectural
elements while interfacing with our clients and construction crews to ensure
that site-specific objectives are reflected in construction documents. Our
structural engineering and design abilities enable us to construct towers that
have maximum antenna site capacity based on the physical features of the land on
which the tower is constructed and the demand in the market in which the tower
is located. We seek to design aesthetically acceptable sites and construct
towers with minimal environmental impact. Our custom structure design abilities
combined with our engineering skills also allow us to build towers in
geographically difficult locations at competitive prices. We believe that this
specialty service will enable us to compete effectively in regions in which
other companies are not able to participate on a cost-efficient basis.
Tower Construction. Our engineering, general contracting, electrical,
structural steel and other specialty licenses allow us to perform services
required to design, develop and construct communications towers. Our ability to
perform civil and electrical engineering as well as tower construction enables
us to expedite and simplify this phase of development by minimizing the need to
subcontract.
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<PAGE> 46
During tower construction, a project team of five to seven people is
dispatched to the site. A temporary field office is established at the site. The
project team is typically composed of our permanent employees, but may be
supplemented with local hires.
We use our information technology abilities to create construction models,
development budgets, critical path schedules and status reports covering
schedules and costs throughout the course of a project. Our civil engineering
capability allows us to prepare the construction site by leveling the land,
removing vegetation and installing access roads as needed. Based on the results
of soil tests that we conduct at each site, we design and build the tower
foundation. After the foundation is in place, we erect the tower. We utilize our
structural engineering capability by constructing a tower designed for maximum
antenna capacity.
Line and Antenna Installation. After erecting the tower and placing the
equipment shelter, we install the antennae and feed lines, including the sweep,
test and orientation. Depending on the project, electricity is installed either
during the erection process to conform with the FAA lighting requirements or
after the tower has been constructed. Our technical crews are regularly trained
in cellular, microwave, fiber optic and direct current power plant system
installation and testing methods. We are also a leader in designing and
implementing in-building wireless systems, as well as a broad range of cellular
and personal communications services repeater systems. Our test equipment and
dedicated radio frequency testing teams allow us to monitor and maintain system
integrity and quality control.
We also offer the ability to construct the switch facility that controls an
antenna's communications with other communications sites. Although switch
construction is not performed at every project site, it is an additional
specialty service we provide.
After constructing the tower, placing the equipment shelter and completing
the antenna work, we install grounding lines and protective fencing around the
site. We then perform final grounding and landscaping as necessary to complete
the project.
Site Acquisition Services. We offer a full range of site acquisition
services, including network pre-design, communication site selection,
communication site acquisition and local zoning and permitting. We offer these
services through local contractors who have knowledge and expertise in the
specific geographic area.
BROADCAST TOWER DEVELOPMENT AND LEASING
We are a leading provider of broadcast tower analysis, design, fabrication,
installation, and technical services. We have over 50 years of experience in the
broadcast tower industry and have worked on the development of more than 700
broadcast towers, which we believe represent approximately 50% of the existing
broadcast tower infrastructure in the United States. Our broadcast tower group
extends our core business of outsourced wireless antenna sites to broadcast
towers. We intend to capitalize on our broadcast tower development expertise to
create tower ownership and leasing opportunities.
In November 1999, Congress passed the Community Broadcasters Protection Act
of 1999, which directs the FCC to offer a new Class A status to qualifying low
power television stations. To qualify, Class A low power television stations,
which were required to notify the FCC of their eligibility by January 28, 2000,
will have to meet certain programming and operational criteria. Under the
statute, Class A low power television stations will not be protected from
interference from digital television stations proposing to maximize their DTV
service, provided the digital television stations notified the FCC of their
intent to maximize facilities no later than December 31, 1999, and the digital
television stations submit a maximization application by May 1, 2000. The FCC
has adopted rules to govern the new service. The new rules specify protection
criteria to be applied in evaluating Class A low power television station
operations vis-a-vis full power and other low power television stations. Class A
stations are required to protect existing analog stations and the facilities
proposed in full power analog applications that had completed all processing
short of grant by November 29, 1999. The decision adopting the new rules also
clarified that DTV maximization applications filed by May 1, 2000 may include
both power and antenna height
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<PAGE> 47
increases above the allotted parameters and changes that extend DTV service
areas beyond the legislated analog service areas. DTV stations may submit
maximization applications after May 1, 2000, but they will be required to
protect Class A stations. The new rules limit the filing of Class A applications
to a single, one-time-only window which is expected to open for six months
beginning in mid to late May 2000.
In 1996, the FCC mandated the conversion of analog television signals to
digital. The mandate specifies that by May 1, 2003, each television station in
the United States must complete construction of new digital broadcasting
facilities and, beginning April 21, 2003, must be simulcasting at least 50% of
its programming on both its analog and digital facilities. This conversion
creates significant potential demand for co-location on broadcast towers.
Broadcast towers require a high level of technical design and erection
expertise, as they reach heights of up to 2,000 feet. Broadcast towers support
extremely powerful television and FM radio signals over entire metropolitan
areas. The existing domestic broadcast tower infrastructure was generally
developed to accommodate individual broadcast signals. This broadcast tower
infrastructure was built primarily in the 1940's and 1950's. Today, it is
considered to be at capacity and somewhat antiquated. The FCC mandate creates
significant infrastructure deployment requirements and burdens for the broadcast
community in the United States. In addition, the engineering and construction
expertise for broadcast towers is limited to a relatively small number of
fabrication and construction companies that specialize in broadcast towers.
Recognizing this opportunity to capitalize on the broadcast infrastructure
tower development and leasing requirement, we have developed a strategic plan
that is designed to position us as the leading tower resource in the broadcast
sector. We have identified the critical core competencies necessary to fulfill
broadcast industry requirements. We offer broadcast tower engineering,
fabrication and erection services. In addition, we have original tower design
specifications and considerable tower modification historical information on
approximately 50% of the existing broadcast tower infrastructure. We believe
that this intellectual property positions us as one of broadcasters' first
points of contact for any broadcast tower project.
CUSTOMERS
Our primary customer currently is Nextel. On a pro forma basis after giving
effect to the Nextel acquisition, the Westower merger and certain other
transactions described under "Unaudited Pro Forma Financial Data," Nextel
represented approximately 29% of our revenues for the year ended December 31,
1999.
Nextel provides a wide array of digital wireless communications services
throughout the United States. Nextel offers a differentiated, integrated package
of digital wireless communications services under the Nextel brand name,
primarily to business users. Nextel's digital mobile network constitutes one of
the largest integrated wireless communications systems utilizing a single
transmission technology in the United States. Nextel has significant specialized
mobile radio spectrum holdings in and around every major business population
center in the country, including all of the top 50 metropolitan statistical
areas in the United States. Nextel files periodic reports and other information
with the SEC. For more information about Nextel, you should read Nextel's SEC
filings. However, we are not incorporating any of Nextel's SEC filings by
reference into this document.
In addition, our customers also include several of the largest wireless
service providers in the United States, including AT&T Wireless and Sprint PCS.
We also have provided services to enhanced specialized mobile radio, specialized
mobile radio and cellular wireless providers. 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 our revenues. For the
year ended December 31, 1998, Powertel and Tritel accounted for 46.6% and 24.3%,
respectively, of our revenues. For the year ended December 31, 1999, Nextel
accounted for 35.0% of our revenues. During this period, no other customer
accounted for more than 10% of SpectraSite's revenues.
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SALES AND MARKETING
We believe that our ability to satisfy a wide range of our customer's
network deployment requirements will make us a preferred provider of all
outsourced antennae site and network services. Our sales and marketing goals are
to:
- use existing relationships and develop new relationships with wireless
service providers to lease antenna space on our owned and managed
communication sites; and
- form affiliations with select communications system vendors who utilize
end-to-end services, including those provided by SpectraSite, which will
enable us to market our services and products through additional channels
of distribution.
Historically, we have capitalized on the strength of our experience,
performance and relationships with wireless service providers to obtain
build-to-suit projects, and we intend to continue to emphasize our capability in
these areas in selling our broad range of services.
Maintaining and cultivating relationships with wireless service providers
is a main focus of senior management. In addition, we have a dedicated group of
representatives focused on sales efforts and establishing relationships with
wireless service providers. The representatives are assigned specific accounts
based on historical experience with a provider and the quality of the
relationship between the SpectraSite representative and such provider. Most
wireless service providers have national corporate headquarters with regional
offices. We believe that most decisions for site acquisition and site leasing
services are made by providers at the regional level with input from their
corporate headquarters. Our sales representatives work with provider
representatives at the local level and, when appropriate, at the national level.
Our sales staff compensation is heavily weighted to incentive-based goals and
measurements. In addition to our dedicated marketing and sales staff, we rely
upon our executive and operations personnel at the national and field office
levels to identify sales opportunities within existing customer accounts, as
well as acquisition opportunities.
COMPETITION
Our principal competitors include American Tower Corporation, Crown Castle
International Corp., Pinnacle Holdings Inc. and SBA Communications Corporation.
Towers are not the only kind of platform for radio transmitters. The FCC
has authorized numerous entities and is considering applications from many
others to provide fixed and mobile satellite services using various frequency
bands in a manner that may compete with terrestrial service providers. Iridium
LLC, for example, had commenced space-borne provision of mobile satellite
service, but had to suspend service while in bankruptcy proceedings. Teledesic
plans to provide high-speed fixed satellite data services through
low-earth-orbit satellites. In 1997, the FCC allocated one gigahertz of spectrum
in the 47 GHz band for any use consistent with the spectrum allocation table.
The FCC has decided to auction this spectrum in 200 MHz blocks for the provision
of communications services. It is unclear whether these new technologies will be
commercially feasible, and to what extent they will offer significant
competitive alternatives to terrestrial structures.
EMPLOYEES
As of December 31, 1999, SpectraSite had 1,198 employees, none of whom are
represented by a collective bargaining agreement. We consider our employee
relations to be good. Due to the nature of the site construction business, we
may experience increases and decreases in employees as site construction
contracts are entered into or completed.
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INTERNATIONAL
Our primary focus is on operations in the United States and Canada.
However, we have established an office in the United Kingdom to evaluate
possible international opportunities and pursue opportunities we consider
attractive.
REGULATORY AND ENVIRONMENTAL MATTERS
FEDERAL REGULATIONS
Both the FCC and the FAA regulate towers used for wireless communications
transmitters and receivers. Such regulations control the siting, marking and
lighting of towers and may, depending on the characteristics of particular
towers, require registration of tower facilities. Wireless communications
antennae operating on towers are separately regulated and independently licensed
by the FCC based upon the particular frequency being used and the service being
provided. In addition to these regulations, SpectraSite must comply with certain
environmental laws and regulations.
Under 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 structures. These standards mandate that the FCC
and the FAA consider the height of the proposed antenna structure, the
relationship of the structure to existing natural or man-made obstructions and
the proximity of the structure to runways and airports. Proposals to construct
or modify existing structures above certain heights or within certain proximity
to airports are reviewed by the FAA to ensure they will not present a hazard to
aviation. The FAA may condition its issuance of no-hazard determinations upon
compliance with specified lighting and marking requirements. The FCC will not
license the operation of wireless telecommunications antennae 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 received all necessary clearances from the FAA. The FCC also enforces
special lighting and painting requirements. Owners of towers on which wireless
communications antennae are located 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 failures. SpectraSite
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 and tort liability.
In 1995, the FCC adopted regulations making the owners of towers, rather
than communications 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. Communications 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 required tower owners, like
SpectraSite, to register existing structures by state, in accordance with filing
windows, over a two-year period between July 1, 1996 and June 30, 1998.
Historically, tower locations were determined using area maps. The FCC has
recognized that, with the proliferation of inexpensive, satellite-based locating
devices, such as Global Positioning System receivers, structures can now be
easily located with a higher degree of accuracy. Accordingly, the FCC has told
owners who determined that tower registration information conflicted with
previously issued licenses for antennae on their towers to register their
structures using the new data and to seek new FAA determinations of no hazard as
necessary under the FAA's rules. The FCC also has instructed licensees or
permittees who discovered that the coordinates on their authorizations differed
from those determined by more accurate means to submit corrective construction
permit applications. In February 1999, the FCC's Wireless Telecommunications
Bureau announced a new policy under which defective applications for wireless
authorizations and antenna structure registrations will be summarily dismissed,
without giving the applicants an opportunity to amend but requiring them to
correct and retender their applications. As part of the new policy, the Bureau
said that effective May 1, 1999, it will
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return and not process tower registration applications including data that do
not agree with information listed on previously issued FAA determinations. The
FCC also announced that applications for FCC communications authorizations would
be dismissed if a tower registration number is not listed on the FCC
application. Although the FCC initially said the rule affecting communications
applications would apply beginning May 1, 1999, for applicants proposing
antennae on existing structures, and July 1, 1999, for applicants proposing to
utilize new towers, the FCC in late April 1999 extended these deadlines. For
services, such as cellular, paging, and personal communications services, which
have already had their records converted to the FCC's new Uniform Licensing
System database, the new tougher dismissal rule applied effective July 1, 1999.
For other communications services that have not yet been converted to the
Uniform Licensing System, the FCC said the new processing rules would go into
effect six months after each service's incorporation into the Uniform Licensing
System. This new policy means that for towers to be of use to FCC applicants, it
will be necessary for tower owners to notify the FAA and obtain FCC tower
registrations well in advance of the date tenants will be filing FCC
applications.
In December 1998, the FCC announced an audit of existing antenna structures
revealed that over one quarter of the audited structures had not been registered
as required by the FCC's rules. In light of this finding and several reported
near misses of towers by aircraft, the FCC in January 1999 announced a no-
tolerance policy, requiring all owners of existing unregistered structures to
register them immediately or face monetary forfeitures or civil fines.
SpectraSite has been working to review the registration of the towers it has
acquired and to confirm the accuracy of the information submitted to the FAA and
the FCC by the prior owners.
The Telecommunications Act of 1996 amended the Communications Act of 1934
by limiting state and local zoning authorities' jurisdiction over the
construction, modification and placement of wireless communications towers. The
new law preserves local zoning authority but prohibits any action that would
discriminate between different providers of wireless services or ban altogether
the construction, modification or placement of communications towers. The 1996
Telecom Act also requires the federal government to help licensees for wireless
communications services gain access to preferred sites for their facilities.
This may require that federal agencies and departments work directly with
licensees to make federal property available for tower facilities.
STATE AND LOCAL REGULATIONS
Most states regulate certain aspects of real estate acquisition and leasing
activities. Where required, SpectraSite outsources site acquisition to licensed
real estate brokers or agents. 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 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.
ENVIRONMENTAL REGULATIONS
Owners and operators of communications towers are subject to, and,
therefore, must comply with environmental laws. The FCC's decision to register a
proposed tower may be subject to environmental review under the National
Environmental Policy Act of 1969, which requires federal agencies to evaluate
the environmental impacts of their decisions under certain circumstances. The
FCC has issued regulations implementing the National Environmental Policy Act.
These regulations place responsibility on each applicant to investigate any
potential environmental effects of operations and to disclose any significant
effects on the environment in an environmental assessment prior to constructing
a tower. In the event the FCC determines the proposed tower would have a
significant environmental impact based on the standards
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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. In addition, we are subject to environmental laws which may
require investigation and clean-up of any contamination at facilities we own or
operate or at third-party waste disposal sites. These laws could impose
liability even if we did not know of, or were not responsible for, the
contamination. Although we believe that we currently have no material liability
under applicable environmental laws, the costs of complying with existing or
future environmental laws, investigating and remediating any contaminated real
property and resolving any related liability could have a material adverse
effect on our business, financial condition or results of operations.
PROPERTIES
SpectraSite is headquartered in Cary, North Carolina, where it currently
leases 62,136 square feet of space. We have established regional offices in the
Atlanta, Chicago and San Francisco areas. We open and close project offices from
time to time in connection with our network design and development services,
which offices are generally leased for periods not exceeding 18 months.
We own a broadcast tower manufacturing facility located in Pine Forge,
Pennsylvania. We also own five acres of land in Surrey, British Columbia,
Canada, on which a 10,000 square foot wireless tower fabrication, assembly and
storage facility and a 5,000 square foot office building are located; four acres
of land near Montreal, Quebec, Canada, on which a 7,000 square foot facility is
located; a one acre lot in Houston, Texas, on which approximately 2,500 square
feet of office space and 5,000 square feet of warehouse space are located; 8.6
acres of land in Visalia, California, on which a 57,000 square foot broadcast
tower manufacturing facility is located; and 0.4 acres of land in Tucson,
Arizona, on which a 6,250 square foot office building is located. We also lease
office space in the following locations:
- Phoenix and Tucson, Arizona;
- Little Rock, Arkansas;
- Burbank, Los Angeles, Newport Beach, Sacramento and San Jose, California;
- Ft. Lauderdale, Palm Beach Gardens, Tampa and Orlando, Florida;
- Ridgeland, Mississippi;
- Las Vegas, Nevada;
- Syracuse, New York;
- Charlotte and Greensboro, North Carolina;
- Columbus, Ohio;
- Portland and Roseburg, Oregon;
- Conshohocken, Forty Fort and Upper Gwynedd Township, Pennsylvania;
- Austin, Dallas and Houston, Texas;
- Redmond and Seattle, Washington; and
- Alberta, Nova Scotia and Ontario, Canada.
Our interests in communications sites are comprised of a variety of fee
interests, leasehold interests created by long-term lease agreements, private
easements, easements and licenses or rights-of-way granted by government
entities. In rural areas, a communications site typically consists of a
three-to-five acre tract which supports towers, equipment shelters and guy wires
to stabilize the structure. Less than 2,500 square feet are required for a
self-supporting tower structure of the kind typically used in metropolitan
areas. Land leases generally have an initial term of five years, with five
additional five-year renewal periods. You should read "--Products and
Services--Wireless Tower Ownership and Leasing" for a list of the locations of
our owned towers.
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LEGAL PROCEEDINGS
From time to time, SpectraSite is involved in various legal proceedings
relating to claims arising in the ordinary course of business. We are not
currently 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 our business, financial condition or results of operations.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers, directors and key employees of SpectraSite are as
follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- ------------------------------------------------------
<S> <C> <C>
Stephen H. Clark..................... 55 President and Chief Executive Officer and a Director
Timothy G. Biltz..................... 41 Chief Operating Officer
David P. Tomick...................... 48 Executive Vice President, Chief Financial Officer and
Secretary
Richard J. Byrne..................... 42 Executive Vice President--Business Development
Calvin J. Payne...................... 47 Executive Vice President--Design and Construction and
a Director
Terry L. Armant...................... 51 Senior Vice President--Operations
John H. Lynch........................ 42 Vice President, General Counsel
Daniel I. Hunt....................... 35 Vice President--Finance and Administration
Steven C. Lilly...................... 30 Vice President and Treasurer
Douglas A. Standley.................. 42 Vice President--Broadcast Group
Alexander L. Gellman................. 39 Vice President--Site Management Group
Lawrence B. Sorrel................... 41 Chairman of the Board
Timothy M. Donahue................... 51 Director
Andrew R. Heyer...................... 42 Director
James R. Matthews.................... 33 Director
Thomas E. McInerney.................. 58 Director
Michael J. Price..................... 42 Director
Rudolph E. Rupert.................... 34 Director
Steven M. Shindler................... 37 Director
Michael R. Stone..................... 37 Director
</TABLE>
Stephen H. Clark is President and Chief Executive Officer of SpectraSite
and a director of Holdings. 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 G. Biltz 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.
David P. Tomick 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
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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 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.
Calvin J. Payne is Executive Vice President--Design and Construction of
SpectraSite and a director of Holdings. 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.
Terry L. Armant 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 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 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 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 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 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.
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<PAGE> 55
Lawrence B. Sorrel has been Chairman of the Board of Holdings 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.
Timothy M. Donahue has been a director of Holdings 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 has been a director of Holdings 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 has been a director of Holdings 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 has been a director of Holdings 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 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.
Michael J. Price has been a director of Holdings since April 1999. Mr.
Price is Co-Chief Executive Officer 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 has been a director of Holdings 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 has been a director of Holdings 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 has been a director of Holdings since its formation in May
1997. Mr. Stone has been employed by J. H. Whitney & Co. since 1989 and serves
as a General Partner. Previously, he was
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<PAGE> 56
with Bain & Company. Mr. Stone is a director of TBM Holdings, Inc., Scirex
Corporation, MedSource Technologies, Inc. and Physicians Surgical Care, Inc.
BOARD OF DIRECTORS
Each member of the board of directors holds office until the next annual
meeting of stockholders and until his or her successor has been duly elected and
qualified. For information regarding certain voting arrangements with respect to
the board of directors, see "Certain Transactions--Stockholders' Agreement."
COMMITTEES OF THE BOARD OF DIRECTORS
The board of directors has formed the following committees:
- Executive Committee;
- Audit Committee; and
- Compensation Committee.
EXECUTIVE COMMITTEE. The members of the executive committee are Stephen
Clark, Andrew Heyer, Thomas McInerney, Steven Shindler, Lawrence Sorrel and
Michael Stone. The principal functions of the executive committee include
exercising the powers of the board of directors during intervals between board
meetings and acting as an advisory body to the board of directors by reviewing
various matters prior to their submission to the board.
AUDIT COMMITTEE. The members of the audit committee are James Matthews,
Michael Price and Lawrence Sorrel. The audit committee performs the following
functions:
- approves the selection of 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 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.
COMPENSATION COMMITTEE. The members of the compensation committee are
Timothy Donahue, Thomas McInerney, Lawrence Sorrel and Michael Stone. The
compensation committee performs the following functions:
- 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.
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
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<PAGE> 57
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 ALL OTHER
NAME AND OTHER RESTRICTED OPTIONS/ COMPENSATION($)
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ANNUAL($) STOCK($) SARS(#) (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
1998 55,192 68,150 -- -- 125,000 --
Senior Vice
President-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 April 1999 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
$32,064 for Messrs. Byrne and Biltz, respectively.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
All options become exercisable immediately upon a change in control. Unless
a particular option grant provides otherwise, a change in control occurs upon a
merger, consolidation, reorganization or any transaction in which all or
substantially all of Holdings' assets are sold, leased or transferred. However,
a transaction in which the holders of Holdings' capital stock immediately prior
to the transaction continue to hold at least a majority of the voting power of
the surviving corporation does not constitute a change in control, and no
options become exercisable upon a change in control as to which a performance
milestone has not been achieved as of the date of the change in control. Holders
of options at the time of the Nextel tower acquisition in April 1999 agreed that
the acquisition and related financing transactions did not constitute a change
of control under their options.
The present value of the options granted was estimated on the date of grant
using the Black-Scholes option pricing model with the following assumptions:
dividend yield of 0.0%, volatility of 0.7, risk-free interest rate of 5.0% and
expected option lives of seven years.
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<PAGE> 58
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS/SARS EMPLOYEES PRICE EXPIRATION PRESENT
NAME GRANTED(#) IN 1999 PER SHARE($) DATE VALUE($)
---- ------------ ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Stephen H. Clark........ 775,000 29 5.00 4/20/99 2,187,825
David P. Tomick......... 225,000 8 5.00 4/20/99 635,175
Terry L. Armant......... 25,000 1 5.00 4/20/99 70,575
Richard J. Byrne........ 200,000 7 5.00 4/20/99 564,600
Timothy G. Biltz........ 300,000 11 5.00 8/31/99 1,764,270
100,000 4 9.26 11/23/99 598,370
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
NUMBER OF OPTIONS IN-THE-MONEY OPTIONS
SHARES AT DECEMBER 31, 1999(#) AT DECEMBER 31, 1999($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME 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
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<PAGE> 59
- 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.
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<PAGE> 60
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 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 Holdings' Series A preferred
stock for an aggregate purchase price of $10.0 million in a transaction exempt
from registration under the Securities Act.
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 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 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 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 former holders of the Series A preferred stock
and the Series B preferred stock, and certain other stockholders of 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.
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<PAGE> 61
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 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 Holdings or its subsidiary holding the Nextel towers becomes
insolvent, or is unable to pay its debts as they become due;
- either 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.
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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 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.
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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.
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 Holdings' Series C preferred stock for $5.00 per share,
respectively. See "--The Preferred Stock Offerings." All shares of Series C
preferred stock converted into shares of common stock on a share-for-share basis
upon consummation of our public offering of common stock on February 4, 2000. 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 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 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 Holdings
and affiliates of each entity are members of Holdings' board of directors.
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To finance a portion of the cash consideration paid to Nextel, Holdings
issued and sold the 2009 notes 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. CIBC World Markets was also an initial
purchaser of Holdings' 2008 notes. CIBC World Markets and its affiliates
received customary fees for such services. Andrew M. Heyer is a director of
Holdings and a Managing Director of CIBC World Markets.
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 Holdings Series A and Series B
preferred stock. In satisfaction of this commitment, Mr. Clark purchased 210,000
shares of Holdings 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 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
Holdings 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 5.80% per annum and matures in December
2002.
STOCKHOLDERS' AGREEMENT
In connection with the closing of the Nextel tower acquisition, Holdings
and its stockholders entered into the third amended and restated stockholders'
agreement, which superseded and replaced the existing stockholders' agreement
among 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 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 Holdings stock to
Holdings' board;
- elect two Nextel designees to Holdings' board;
- elect two designees of funds affiliated with J.H. Whitney & Co. to
Holdings' board;
- elect one designee of Canadian Imperial Bank of Commerce or its
affiliates to Holdings' board;
- elect the Chief Executive Officer, initially Stephen H. Clark, to
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
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- use their best efforts to elect a Welsh, Carson affiliate, Lawrence B.
Sorrel, as Chairman of 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 Holdings stock and
the date on which the stockholder owns less than 8% of 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 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 Holdings
stock and August 4, 2001. 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 Holdings' stock, so long as the
lock-up binds SpectraSite's executive officers and all holders of more than 5%
of 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 Holdings' stock will continue to be governed by the
coordinated distribution requirements of Holdings' second amended and restated
registration rights agreement. See "--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 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.
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 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
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- 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
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 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
Holdings becomes eligible to file such a registration statement. Nextel or the
institutional shareholders may request this registration if:
- 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
Holdings registers any of its common stock under the Securities Act for sale to
the public for SpectraSite's own 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 Holdings stockholders
who wish to participate in the offering. Registrations by 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 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 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 Holdings' restricted stock and
stock held by management.
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PRINCIPAL STOCKHOLDERS
The table below sets forth, as of February 29, 2000, information with
respect to the beneficial ownership of Holdings' capital stock by:
- each person who is known by Holdings to be the beneficial owner of more
than 5% of any class or series of capital stock of Holdings;
- 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 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 EQUITY
NAME OF BENEFICIAL OWNER OWNED OWNERSHIP
------------------------ ------------ -------------
<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.
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(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 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 common 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 Holdings'
amended and restated articles 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 reported as beneficially owned by Mr. Price 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.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
CREDIT FACILITY
SpectraSite Communications, Inc., a wholly-owned subsidiary of Holdings,
entered into a credit agreement, dated as of April 20, 1999, with CIBC
Oppenheimer Corp., now known as CIBC World Markets Corp., Credit Suisse First
Boston, New York Branch, and certain other lenders. This credit facility
provides a $500.0 million credit facility. Proceeds from the credit facility
were used to consummate the Nextel tower acquisition, and future borrowings will
be used to finance the construction and acquisition of additional towers and for
working capital and general corporate purposes.
The following is a summary of the material terms of the credit facility.
This summary is qualified in its entirety by the terms of the credit facility.
The credit facility consists of:
- a $50.0 million revolving credit facility that, subject to the
satisfaction of certain financial covenants, may be drawn at any time and
from time to time prior to December 31, 2005, at which time all amounts
drawn under the revolving credit facility must be paid in full;
- a $300.0 million multiple draw term loan that may be drawn at any time
and from time to time through March 31, 2002, of which $50.0 million was
borrowed in December 1999; the amount drawn must be repaid in quarterly
installments commencing on June 30, 2002 and ending on December 31, 2005;
and
- a $150.0 million term loan that was drawn in full at the closing of the
Nextel tower acquisition and that amortizes at a rate of 1.0% annually,
payable in quarterly installments beginning in 2002, $67.5 million on
March 31, 2006 and the balance due on June 30, 2006.
In addition, the credit facility contemplates borrowings to be funded by
affiliates of certain of Holdings' stockholders subject to the approval of a
majority of the lenders under the credit facility and the consent of such
affiliates.
The revolving credit loans and the multiple draw term loans will bear
interest, at SpectraSite Communications' option, at either:
- Canadian Imperial Bank of Commerce'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
- the reserve adjusted London interbank offered rate, plus an applicable
margin of 3.0% per annum initially, which margin after a period of time
may decrease based on a leverage ratio.
The term loan bears interest, at SpectraSite Communications' option, at
either:
- Canadian Imperial Bank of Commerce's base rate, plus 2.0% per annum,
which margin after a period of time may decrease based on a leverage
ratio; or
- the reserve adjusted London interbank offered rate, plus 3.5% per annum,
which margin after a period of time may decrease based on a leverage
ratio.
SpectraSite Communications will be required to pay a commitment fee of
between 1.25% and 0.50% per annum in respect of the undrawn portion of the
multiple draw term loan, depending on the amount undrawn. SpectraSite
Communications will be required to pay a commitment fee of 0.50% per annum in
respect of the undrawn portion of the revolving credit facility.
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SpectraSite Communications may be required to prepay the credit facility in
part upon the occurrence of certain events, such as a sale of assets, the
incurrence of certain additional indebtedness and the generation of excess cash
flow.
Holdings and certain of SpectraSite Communications' subsidiaries have
guaranteed SpectraSite Communications' obligations under the credit facility.
The credit facility is further secured by:
- substantially all the tangible and intangible assets of SpectraSite
Communications and its subsidiaries; and
- a pledge of all of the capital stock of SpectraSite Communications and of
all of its subsidiaries, other than certain foreign subsidiaries.
The credit facility contains a number of covenants that, among other
things, restrict the ability of Holdings, SpectraSite Communications and their
subsidiaries to:
- incur additional indebtedness;
- create liens on assets;
- make investments, make acquisitions, or engage in mergers or
consolidations;
- dispose of assets;
- enter into new lines of business;
- engage in certain transactions with affiliates; and
- pay dividends or make capital distributions.
SpectraSite Communications, however, will be permitted to pay dividends for
the purpose of paying cash interest when due on the 2008 notes, the 2009 notes
and the new notes so long as no default under the credit facility then exists or
would exist after giving effect to such payment.
In addition, the credit facility requires compliance with certain financial
covenants, including requiring SpectraSite Communications and its subsidiaries,
on a consolidated basis, to maintain:
- a maximum ratio of total debt to annualized EBITDA;
- a minimum interest coverage ratio;
- a minimum fixed charge coverage ratio; and
- a minimum annualized EBITDA, for the first year only.
SpectraSite Communications does not expect that such covenants will
materially impact its ability and the ability of its subsidiaries to operate
their respective businesses.
The credit facility contains customary events of default.
SENIOR DISCOUNT NOTES
On June 26, 1998, Holdings issued $225.2 million in aggregate principal
amount at maturity of its 12% senior discount notes due 2008 under an indenture
between Holdings and the United States Trust Company of New York, as trustee.
The 2008 notes mature on July 15, 2008 and rank equally with the 2009 notes.
The 2008 notes were issued at a substantial discount to their principal
amount and were sold to investors at a price that yielded gross proceeds to
SpectraSite of $125.0 million. The 2008 notes accrete
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daily at a rate of 12% per year, compounded semiannually, to an aggregate
principal amount of $225.2 million as of July 15, 2003. Cash interest will not
accrue on the 2008 notes prior to July 15, 2003. Commencing July 15, 2003, cash
interest on the 2008 notes will accrue and be payable semiannually in arrears on
each January 15 and July 15, commencing January 15, 2004, at a rate of 12% per
year. Except as described in this paragraph, the 2008 notes are not redeemable
at Holdings' option prior to July 15, 2003. Thereafter, the 2008 notes will be
subject to redemption at any time at the option of Holdings, in whole or in
part, at the redemption prices set forth in the indenture plus accrued and
unpaid interest thereon, if any, to the applicable redemption date. In addition,
from time to time prior to July 15, 2001, SpectraSite may on one or more
occasions redeem up to 25% of the aggregate principal amount at maturity of the
2008 notes issued at a redemption price of 112% of their accreted value, to the
redemption date, with the net cash proceeds from one or more equity offerings;
provided, however, that at least 75% of the aggregate principal amount at
maturity of 2008 notes originally issued remains outstanding immediately after
the occurrence of such redemption.
On April 20, 1999, Holdings issued $586.8 million in aggregate principal
amount at maturity of its 11 1/4% senior discount notes due 2009 under an
indenture between Holdings and the United States Trust Company of New York, as
trustee. The 2009 notes mature on April 15, 2009 and rank equally with the 2008
notes.
The 2009 notes were issued at a substantial discount to their principal
amount and were sold to investors at a price that yielded gross proceeds to
SpectraSite of $340.0 million. The 2009 notes accrete daily at a rate of 11 1/4%
per annum, compounded semiannually, to an aggregate principal amount of $586.8
million as of April 15, 2004. Cash interest will not accrue on the 2009 notes
prior to April 15, 2004. Commencing April 15, 2004, cash interest on the 2009
notes will accrue and be payable semiannually in arrears on each October 15 and
April 15, commencing October 15, 2004, at a rate of 11 1/4% per annum.
Except as described in this paragraph, the 2009 notes are not redeemable at
Holdings' option prior to April 15, 2004. Thereafter, the 2009 notes will be
subject to redemption at any time at the option of Holdings, in whole or in
part, at the redemption prices set forth in the indenture plus accrued and
unpaid interest thereon, if any, to the applicable redemption date. In addition,
from time to time prior to April 15, 2002, SpectraSite may on one or more
occasions redeem up to 35% of the aggregate principal amount at maturity of the
2009 notes issued at a redemption price of 111.25% of their accreted value, to
the redemption date, with the net cash proceeds from one or more equity
offerings; provided, however, that at least 65% of the aggregate principal
amount at maturity of 2009 notes originally issued remains outstanding
immediately after the occurrence of such redemption.
The 2008 notes and the 2009 notes are general unsecured obligations of
Holdings, rank senior in right of payment to any future indebtedness of Holdings
which is made expressly junior thereto and rank equal in right of payment with
all current and future unsecured senior indebtedness of Holdings. All of the
operations of Holdings are conducted through its subsidiaries, and Holdings'
subsidiaries did not guarantee the 2008 notes nor the 2009 notes. Accordingly,
the 2008 notes and the 2009 notes are effectively subordinated to all
indebtedness and all other liabilities or obligations of such subsidiaries,
including borrowings under the $500.0 million credit facility.
Upon the occurrence of a change of control, the holders of the 2008 notes
and the holders of the 2009 notes have the right to require Holdings to
repurchase such holders' 2008 notes or 2009 notes, respectively, in whole or in
part, at a price equal to 101% of their accreted value or principal amount, as
applicable, plus accrued and unpaid interest, if any, to the date of purchase.
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The indentures governing the 2008 notes and the 2009 notes contain certain
covenants that, among other things, limit the ability of Holdings and its
subsidiaries to:
- incur additional indebtedness and issue preferred stock;
- pay dividends or make certain other restricted payments;
- enter into transactions with affiliates;
- make certain asset dispositions;
- merge or consolidate with, or transfer substantially all its assets to,
another entity;
- create liens securing indebtedness; and
- permit subsidiaries to incur restrictions on their ability to pay
dividends to Holdings.
However, all of these limitations are subject to a number of important
qualifications.
On March 24, 1999, Holdings received consents from all holders of the 2008
notes to certain amendments to the indenture governing the 2008 notes. The
indenture amendments allowed for consummation of the Nextel tower acquisition
and the related financing transactions.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
Holdings originally sold the outstanding new notes to Morgan Stanley & Co.
Incorporated, CIBC World Markets Corp., Credit Suisse First Boston Corporation,
Deutsche Bank Securities Inc., Lehman Brothers Inc., BMO Nesbitt Burns Corp. and
Scotia Capital (USA) Inc. These initial purchasers subsequently placed the
outstanding notes with:
- qualified institutional buyers in reliance on Rule 144A under the
Securities Act; and
- qualified buyers outside the United States in reliance on Regulation S
under the Securities Act.
Holdings entered into a registration rights agreement with the initial
purchasers, as a condition to their purchase of the outstanding notes, under
which Holdings agreed, for the benefit of the outstanding note holders and at
its own expense, to file a registration statement for this exchange offer, of
which this prospectus is a part, with the SEC. When the exchange offer
registration statement is declared effective, Holdings will offer the registered
notes in exchange for tender of the outstanding notes. For each outstanding note
tendered to Holdings in response to the exchange offer, the holder of an
outstanding cash note will receive a registered note having an original
principal amount equal to that of the tendered outstanding cash note, and the
holder of an outstanding discount note will receive a registered note having an
original principal amount at maturity equal to that of the tendered outstanding
discount note.
Based upon interpretations by the SEC staff 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 registered notes issued under this exchange offer
in exchange for the outstanding notes, in general will be freely tradeable after
the exchange offer, without compliance with the registration and prospectus
delivery requirements of the Securities Act. However, any purchaser of
outstanding notes who is a SpectraSite affiliate, within the meaning of Rule 405
under the Securities Act, who does not acquire the registered notes in the
ordinary course of business, or who tenders in the exchange offer for the
purpose of participating in a distribution of the registered notes, could not
rely on the SEC staff position enunciated in such no-action letters and, in the
absence of an applicable exemption, must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. A holder's failure to comply with those requirements in such
an instance may result in that holder incurring liability under the Securities
Act. We do not assume or indemnify you against any such liability.
As the above mentioned no-action letters contemplate, each holder accepting
the exchange offer is required to represent to us, in a letter of transmittal,
that:
- the holder or the person receiving the registered notes, whether or not
such person is the holder, will acquire those registered notes in the
ordinary course of business;
- the holder or any other acquiror is not engaging in a distribution of the
registered notes;
- the holder or any other acquiror has no arrangement or understanding with
any person to participate in a distribution of the registered notes;
- neither the holder nor any other acquiror is a Holdings affiliate within
the meaning of Rule 405 under the Securities Act; and
- the holder or any other acquiror acknowledges that if that holder or
other acquiror participates in the exchange offer for the purpose of
distributing the registered notes, it must comply with the registration
and prospectus delivery requirements of the Securities Act in connection
with any such resale and cannot rely on the above mentioned no-action
letters.
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As indicated above, each broker-dealer that receives for its own account a
registered note in exchange for outstanding notes must acknowledge that it:
- acquired the outstanding notes for its own account as a result of
market-making activities or other trading activities;
- has not entered into any arrangement or understanding with Holdings or
any Holdings affiliate to distribute the registered notes; and
- will deliver a prospectus meeting the requirements of the Securities Act
in connection with any resale of the registered 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 SEC staff do not permit Holdings to effect this exchange offer, or if for
any other reason the exchange offer is not consummated by September 14, 2000,
SpectraSite will:
- use reasonable best efforts to file a shelf registration statement
covering resales of the outstanding notes;
- use reasonable best efforts to cause the shelf registration statement to
be declared effective under the Securities Act; and
- use reasonable best efforts to keep the shelf registration statement
continuously effective until the expiration of the period referred to in
Rule 144(k) with respect to the notes or such shorter period that will
terminate when all of the notes covered by the shelf registration
statement have been sold under the shelf registration statement.
Holdings will, if and when it files the shelf registration statement,
provide to each applicable holder of the outstanding notes copies of the
prospectus which is a part of the shelf registration statement. A holder that
sells the outstanding notes under the shelf registration statement generally:
- must be named as a selling security holder in the related prospectus;
- must 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 that holder, including certain indemnification
obligations.
In addition, each of the outstanding note holders must deliver information to
Holdings, to be used in connection with the shelf registration statement, in
order to have his or her outstanding notes included in the shelf registration
statement and to benefit from the provisions set forth in the foregoing
paragraph.
The registration rights agreement covering the outstanding notes provides
that Holdings will use reasonable best efforts to complete the exchange offer or
file and cause to be declared effective a shelf registration statement on or
prior to September 14, 2000. In the event that by September 14, 2000 neither the
exchange offer is consummated nor the shelf registration statement is declared
effective, the interest rate on the outstanding notes will increase by 0.50% per
year from and including September 15, 2000, but excluding the date on which all
registration defaults are cured. The sole remedy available to the outstanding
note holders will be the immediate assessment of cash interest on the
outstanding notes, whether or not cash interest is then payable on the
outstanding notes under the indenture. All interest payable because a
registration default occurred will be payable to the outstanding notes holders
in cash on each March 15 and September 15, commencing on March 15, 2001, until
the exchange offer is completed or the shelf registration statement is declared
effective. After the date on which the exchange offer is completed or the shelf
registration statement is declared effective, the interest rate on the cash
notes will revert to 10 3/4% per year and the interest rate on the discount
notes will revert to 12 7/8% per year.
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Outstanding note holders must:
- make certain representations to us in order to participate in the
exchange offer;
- deliver information to be used in connection with the shelf registration
statement, if required; and
- provide comments on the shelf registration statement within the time
periods set forth in the registration rights agreement
in order to have their outstanding new notes included in the shelf registration
statement and to benefit from the provisions regarding additional interest
payable because a registration default occurred, as set forth above.
The preceding summary of the material 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.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal for the exchange offer, we will accept any and
all outstanding new notes validly tendered and not withdrawn prior to 5:00 p.m.,
New York City time, on the expiration date. See "-- Expiration Date; Extensions;
Amendments." Holdings will issue $1,000 principal amount of registered cash
notes in exchange for each $1,000 principal amount of outstanding cash notes
accepted in the exchange offer, and Holdings will also issue $1,000 original
principal amount at maturity of registered discount notes in exchange for each
$1,000 original principal amount at maturity of outstanding discount notes
accepted in the exchange offer. Holders may tender some or all of their
outstanding notes in response to the exchange offer. However, outstanding notes
may be tendered only in integral multiples of $1,000.
The form and terms of the registered notes are the same as the form and
terms of the outstanding notes except that:
- the registered notes have been registered under the Securities Act and
hence will not bear legends restricting their transfer; and
- the registered note holders will not be entitled to certain rights under
the registration rights agreement covering the outstanding notes,
including the provisions providing for an increase in the interest rate
on the outstanding 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 registered notes will evidence the same debt as the outstanding notes
and will be entitled to the benefits of the indenture governing the outstanding
notes. As of the date of this prospectus, $200,000,000 aggregate original
principal amount of cash notes and $559,800,000 aggregate original principal
amount at maturity of discount notes were outstanding. We have fixed the close
of business on , 2000 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.
Outstanding note holders do not have any appraisal or dissenters' rights
under the Delaware General Corporation Law or the indenture in connection with
the exchange offer. We intend to conduct the exchange offer in accordance with
the applicable requirements of the Exchange Act and the rules and regulations of
the SEC related to such offers.
Holdings shall be deemed to have accepted validly tendered outstanding new
notes when, as and if we give oral or written notice to that effect to United
States Trust Company of New York, which is the exchange agent. The exchange
agent will act as agent for the tendering holders for the purpose of receiving
the registered notes from Holdings.
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If any tendered outstanding notes are not accepted for exchange either
because of an invalid tender, the occurrence of certain other events set forth
herein, or otherwise, the certificates for the unaccepted outstanding notes will
be returned, without expense, to the tendering holder as promptly as practicable
after the exchange offer's expiration date.
Holders who tender outstanding 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
outstanding notes in response to the exchange offer. We 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
We shall keep the exchange offer open for at least 20 business 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, after the date that notice of the exchange offer is
mailed to outstanding note holders. The expiration date shall be 5:00 p.m., New
York City time, on , 2000, unless we, in our sole discretion, extend
the exchange offer, in which case the expiration date shall be the latest date
and time to which we extend the exchange offer.
If we decide to extend the exchange offer, we will notify United States
Trust Company of New York, which is the exchange agent, of the extension by oral
or written notice, and will mail an announcement of the extension to the
registered holders of new notes 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:
- to delay accepting any outstanding 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 termination to the exchange
agent; or
- to amend the terms of the exchange offer in any manner.
We will give oral or written notice of any delay in acceptance, extension,
termination or amendment to the registered holders as promptly as practicable.
PROCEDURES FOR TENDERING
Only an outstanding note holder may tender such outstanding 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 the letter of transmittal so requires, or transmit an
agent's message in connection with a book-entry transfer, and mail or otherwise
deliver the letter of transmittal or facsimile, or agent's message, together
with the outstanding notes and any other required documents, to United States
Trust Company of New York, which is the exchange agent, prior to 5:00 p.m., New
York City time, on the expiration date. In addition, either:
- the exchange agent must receive the letter of transmittal and
certificates for the outstanding notes prior to the expiration date;
- the exchange agent must receive a timely confirmation of a book-entry
transfer of the outstanding notes into the exchange agent's account at
DTC according to the procedure for book-entry transfer described below,
prior to the expiration date; or
- the holder must comply with the guaranteed delivery procedures described
below.
For effective tender, the exchange agent must receive the outstanding notes
or book-entry confirmation, as the case may be, the letter of transmittal, and
other required documents, at the address set forth below under "-- Exchange
Agent" prior to 5:00 p.m., New York City time, on the expiration
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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 outstanding notes on behalf
of the outstanding notes' beneficial owners to tender their outstanding notes as
if they were holders. To effect a tender of outstanding notes, DTC participants
should either:
- complete and sign the letter of transmittal, or a manually signed
facsimile thereof, have the signature guaranteed if required by the
instructions, and mail or deliver the letter of transmittal, or the
manually signed facsimile, to the exchange agent according to the
procedure set forth in "Procedures for Tendering;" or
- transmit their acceptance to DTC through the DTC automated tender offer
program 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 an 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."
Each holder's tender, and Holdings' acceptance, will constitute agreement
between such holder and Holdings 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 OUTSTANDING NOTES, THE LETTER OF TRANSMITTAL OR
AGENT'S MESSAGE, AND ALL OTHER REQUIRED DOCUMENTS, TO THE EXCHANGE AGENT IS AT
THE HOLDER'S ELECTION AND SOLE RISK. AS AN ALTERNATIVE TO MAIL DELIVERY, HOLDERS
MAY WISH TO CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, HOLDERS
SHOULD ALLOW SUFFICIENT TIME TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE
EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OUTSTANDING NOTES SHOULD BE SENT TO
SPECTRASITE. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL
BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR THEM.
Any beneficial owner whose outstanding 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 the
registered holder to tender on the beneficial owner's behalf. See "Instructions
to Registered Holder and/or Book-Entry Transfer Facility Participant from
Beneficial Owner" included with the letter of transmittal.
A member of the Medallion System must guarantee signatures on a letter of
transmittal or a notice of withdrawal, as the case may be, unless the
outstanding notes tendered thereto are tendered, respectively:
- by a registered holder who has not completed the box entitled Special
Registration Instructions or Special Delivery Instructions on the letter
of transmittal; or
- for the account of a Medallion System member.
In the event that signatures on a letter of transmittal or a notice of
withdrawal, as the case may be, must be guaranteed, such guarantee must be by a
Medallion System member.
If a person other than the registered holder of any outstanding notes
listed therein signs the accompanying letter of transmittal, the outstanding
notes must be endorsed or accompanied by a properly completed bond power, signed
by the registered holder as his or her name appears on the outstanding notes,
with the signature guaranteed by a Medallion System member.
If trustees, executors, administrators, guardians, attorneys-in-fact,
offices of corporations, or others acting in a fiduciary or representative
capacity sign the letter of transmittal or any outstanding notes or bond powers,
such persons should so indicate when signing, and they must submit evidence
satisfactory to SpectraSite of their authority to so act, with the letter of
transmittal.
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SpectraSite will determine, in its sole discretion, all questions as to the
validity, form, eligibility, including time of receipt, acceptance and
withdrawal of tendered outstanding notes. This determination will be final and
binding. We reserve the absolute right to reject any and all outstanding notes
not properly tendered, or any outstanding notes, Holdings' acceptance of which
would, in the opinion of SpectraSite's counsel, be unlawful. We also reserve the
right, in our sole discretion, to waive any defects, irregularities or
conditions of tender as to particular outstanding notes. Our interpretation of
the terms and conditions of the exchange offer, including the instructions in
the letter of transmittal, will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of outstanding
notes must be cured within such time as we shall determine. Although we intend
to notify holders of defects or irregularities with respect to tenders of
outstanding notes, neither Holdings, the exchange agent nor any other person
shall incur any liability for failure to give such notification. Tenders of
outstanding notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. If the exchange agent receives any
outstanding notes that are not properly tendered, and as to which the defects or
irregularities have not been cured or waived, the exchange agent will return
them to the tendering holders, unless otherwise provided in the letter of
transmittal, as soon as practicable following the expiration date.
ACCEPTANCE OF OUTSTANDING NOTES FOR EXCHANGE; DELIVERY OF REGISTERED NOTES
For each outstanding cash note Holdings accepts for exchange, the holder
will receive a registered cash note having a principal amount equal to that of
the surrendered outstanding cash note. Likewise, for each outstanding discount
note Holdings accepts for exchange, the holder will receive a registered
discount note having a principal amount at maturity equal to that of the
surrendered outstanding discount note. For purposes of the exchange offer,
Holdings shall be deemed to have accepted properly tendered outstanding notes
for exchange when, as and if Holdings has given oral or written notice to that
effect to United States Trust Company of New York, as exchange agent.
In all cases, Holdings will issue registered notes for outstanding notes
that are accepted for exchange under the exchange offer only after the exchange
agent's timely receipt of certificates for such outstanding notes, or a timely
book-entry confirmation of the outstanding notes into the exchange agent's
account at the book-entry transfer facility, plus a properly completed and duly
executed letter of transmittal or agent's message and all other required
documents. If Holdings does not accept any tendered outstanding notes for any
reason set forth in the terms and conditions of the exchange offer, we will
return the unaccepted or non-exchanged outstanding notes without expense to the
tendering holder, or, in the case of outstanding notes tendered by book-entry
transfer into the exchange agent's account, the non-exchanged outstanding notes
will be credited to an account maintained with the book-entry transfer facility,
as promptly as practicable after the expiration date.
BOOK-ENTRY TRANSFER
United States Trust Company of New York, as exchange agent, will establish
a new account or utilize an existing account at DTC for the outstanding notes
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 outstanding notes may make a book-entry tender of outstanding notes
by causing DTC to transfer such outstanding notes into the exchange agent's
account in accordance with DTC's procedures for such transfer. However, the
exchange agent must receive, at its address set forth below under the caption
"Exchange Agent," on or prior to the expiration date, or the holders must comply
with the guaranteed delivery procedures described below to submit, 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,
and any other required documents. Document delivery to DTC in accordance with
DTC's procedures does not constitute delivery to the exchange agent.
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The term agent's message means a message transmitted by DTC to, and
received by, the exchange agent, forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgment from the DTC
participant tendering the outstanding notes, stating:
- the aggregate principal amount of outstanding notes which have been
tendered by such participant;
- that such participant has received and agrees to be bound by the terms of
the letter of transmittal; and
- that Holdings may enforce that agreement against the participant.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their outstanding notes and:
- whose outstanding notes are not immediately available;
- who cannot deliver their outstanding notes, the letter of transmittal or
any other required documents, to United States Trust Company of New York,
which is the exchange agent; or
- 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;
(b) prior to the expiration date, the exchange agent receives from an
institution listed in clause (a) above 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 the outstanding notes and the principal amount of
outstanding 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 an agent's message, together with the certificate(s) representing the
outstanding notes, or a confirmation of book-entry transfer of the 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 institution with the exchange agent; and
(c) the exchange agent receives, no later than five New York Stock
Exchange trading days after the expiration date, the certificate(s)
representing all tendered outstanding notes in proper form for transfer, or
a confirmation of book-entry transfer of such outstanding 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 an agent's message,
and all other documents required by the letter of transmittal.
Holders who wish to tender their outstanding notes according to the
guaranteed delivery procedures set forth above may request that the exchange
agent send them a Notice of Guaranteed Delivery.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of outstanding notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on ,
2000; otherwise such tenders are irrevocable.
To withdraw a tender of outstanding notes in the exchange offer United
States Trust Company of New York, which is the exchange agent, must receive a
telegram, telex, letter or facsimile transmission notice of withdrawal 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:
- specify the name of the person having deposited the outstanding notes to
be withdrawn;
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- identify the outstanding notes to be withdrawn, including the certificate
number(s) and principal amount of such outstanding notes, or, in the case
of outstanding notes transferred by book-entry transfer, the name and
number of the account at the book-entry transfer facility to be credited;
- be signed by the holder in the same manner as the original signature on
the letter of transmittal by which the outstanding notes were tendered,
including any required signature guarantees, or be accompanied by
documents of transfer sufficient to have the trustee with respect to the
outstanding notes register the transfer of such outstanding notes into
the name of the person withdrawing the tender; and
- specify the name in which to register the outstanding notes, if different
from that of the depositor.
Holdings will determine all questions as to the validity, form and
eligibility, including time of receipt, of the notices. This determination shall
be final and binding on all parties. Any outstanding notes so withdrawn will be
deemed not to have been validly tendered for purposes of the exchange offer and
no registered notes will be issued with respect thereto unless the outstanding
notes so withdrawn are validly retendered. Holdings will return to the holder
any outstanding notes which have been tendered but which are not accepted for
exchange, without expense to the holder, as soon as practicable after
withdrawal, rejection of tender, or termination of the exchange offer. Holders
may retender properly withdrawn outstanding notes 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, we shall not be
required to accept for exchange, or offer registered notes for, any outstanding
notes, and may terminate or amend the exchange offer as provided herein before
the acceptance of the outstanding 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 our judgment, might impair materially our ability to proceed with
the exchange offer, or any material adverse development has occurred in any
existing action or proceeding with respect to Holdings or any of its
subsidiaries; or
(b) any law, statute, rule, regulation or interpretation by the SEC
staff is proposed, adopted or enacted, which, in our judgment, might impair
materially our ability to proceed with the exchange offer, or impair
materially our contemplated benefits from the exchange offer; or
(c) any governmental approval has not been obtained, which approval we
shall, in our discretion, deem necessary for the consummation of the
exchange offer as contemplated hereby.
If we determine in our reasonable discretion that any of the conditions are
not satisfied, we may:
- refuse to accept any outstanding notes and return all tendered
outstanding notes to the tendering holders;
- extend the exchange offer and retain all outstanding notes tendered prior
to the expiration of the exchange offer, subject, however, to the
holders' rights to withdraw the outstanding notes; or
- waive the unsatisfied conditions and accept all properly tendered
outstanding notes which have not been withdrawn.
We shall keep the exchange offer open for at least 20 business days, or
longer if applicable law so requires, 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 we mail notice of
the exchange offer to outstanding note holders.
EXCHANGE AGENT
United States Trust Company of New York has been appointed as the exchange
agent for this exchange offer. Questions and requests for assistance, requests
for additional copies of this prospectus or of
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the letter of transmittal, and requests for notice of guaranteed delivery should
be directed to the exchange agent, addressed as follows:
<TABLE>
<S> <C> <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 TO AN ADDRESS OTHER THAN THOSE SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
FEES AND EXPENSES
Holdings will bear the expenses of soliciting tenders. 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 Holdings and its affiliates or its agents.
Holdings 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. Holdings, 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 with the exchange
offer.
Holdings will pay the cash expenses incurred in connection with the
exchange offer. Such expenses include the exchange agent's and the trustee's
fees and expenses, accounting and legal fees, and printing costs, among others.
ACCOUNTING TREATMENT
The registered notes will be recorded at the same carrying value as the
outstanding notes, which is face value, as reflected in Holdings' accounting
records on the date of exchange. Accordingly, Holdings will not recognize any
gain or loss for accounting purposes. The exchange offer expenses will be
expensed over the term of the registered notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
The outstanding notes that are not exchanged for registered notes in
response to the exchange offer will remain restricted securities. Accordingly,
such outstanding notes may be resold only:
- to Holdings, upon redemption thereof or otherwise;
- so long as the outstanding notes are eligible for resale under 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
or under another exemption from the registration requirements of the
Securities Act, and based upon an opinion of counsel reasonably
acceptable to us;
- outside the United States to a foreign person in a transaction meeting
the requirements of Regulation S under the Securities Act; or
- under an effective registration statement under the Securities Act.
Any resale of outstanding notes must comply with any applicable securities
laws of any state of the United States.
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DESCRIPTION OF THE NOTES
The registered notes have the same form and terms as the outstanding notes,
which they replace, with two exceptions. First, because the issuance of the
registered notes has been registered under the Securities Act, the registered
notes will not bear legends restricting their transfer. Second, the holders of
registered notes will not be entitled to rights under the registration rights
agreement, since the primary provision of that agreement will terminate when the
exchange offer is consummated. Copies of the indentures, dated March 15, 2000,
both between Holdings and United States Trust Company of New York, as trustee,
have been filed as exhibits to the exchange offer registration statement of
which this prospectus forms a part.
The following is a summary of the material terms of the indentures
governing the new notes. This summary does not include all the provisions of the
indentures, nor does it include certain terms made a part of the indentures by
the Trust Indenture Act of 1939, as amended. You can find definitions of
capitalized terms used in the following summary under the subheading "--Certain
Definitions." Certain terms contained in this summary but not capitalized in
this summary or defined under the subheading "--Certain Definitions" are defined
in the indentures.
GENERAL
METHODS OF PAYMENT
The 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. The initial
office for transfers is the corporate trust office of the trustee, at 114 West
47th Street, 25th Floor, New York, New York 10036. However, at Holdings' option,
interest payments may be made by check, mailed to the registered holders of the
notes at their registered addresses.
METHODS OF ISSUANCE
Holdings will issue the registered notes 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 a transfer or an exchange
of notes, but Holdings may require payment of a sum sufficient to cover any
transfer tax or other similar governmental charge payable in connection with any
such transfer or exchange.
Subject to the covenants described below under "--Certain Covenants,"
Holdings may issue additional notes under the indentures. Any additional notes
issued under either indenture will be treated as the same class of notes
initially issued under that indenture.
FEDERAL TAX ISSUES
For United States federal income tax purposes, a significant amount of
original issue discount, taxable as ordinary income, will be recognized by a
registered holder of the discount notes as such discount is amortized from the
Issue Date. However, holders will not receive any payments on the discount notes
until 2005. For a description of certain tax matters related to an investment in
the discount notes, see "Certain United States Federal Tax Considerations."
TERMS OF THE NOTES
The notes:
- are unsecured, senior obligations of Holdings;
- rank equally with our other Senior Indebtedness (including the 2008 notes
and the 2009 notes);
- are effectively subordinated in right of payment to all existing and
future secured Indebtedness of Holdings and all obligations, including
trade payables, of its subsidiaries;
- are senior in right of payment to any future subordinated Indebtedness of
Holdings; and
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- mature on March 15, 2010.
The cash notes began accruing interest from the Issue Date, payable each
March 15 and September 15, commencing September 15, 2000.
The discount notes will not accrue cash interest until March 15, 2005. The
principal amount represented by each note will accrete from $535.86 to $1,000
during the period from the Issue Date to March 15, 2005. Thereafter, cash
interest on the discount notes will accrue at a rate of 12.875% per annum and
will be payable in arrears on March 15 and September 15 of each year commencing
on September 15, 2005 to holders of record at the close of business on the
immediately preceding March 1 and September 1, respectively. Interest will be
computed on the basis of a 360-day year, consisting of twelve 30-day months.
REDEMPTION
TERMS OF OPTIONAL REDEMPTION
Prior to March 15, 2003, Holdings may redeem up to 35% of the principal
amount at maturity of the notes at any time and from time to time but only from
the proceeds of Equity Offerings. The redemption price for any such redemption
will be 110.750% of the principal amount of the cash notes being redeemed and
112.875% of the Accreted Value of the discount notes being redeemed, plus
accrued and unpaid interest, if any, to the redemption date. At least 65% of the
aggregate principal amount at maturity of the discount notes or principal amount
of the cash notes originally issued (excluding notes held by Holdings or any of
its subsidiaries) must remain outstanding after each such redemption, and each
such redemption must occur within 90 days after the date of closing of the
related Equity Offering.
Holdings may redeem the notes at any time or from time to time on or after
March 15, 2005. Holdings shall pay accrued and unpaid interest, if any, on the
principal amount of the cash notes or Accreted Value of the discount notes, as
the case may be, being redeemed to the redemption date. For any notes being
redeemed in any twelve-month period beginning on March 15 of the years indicated
in Column A below, Holdings shall pay a redemption price equal to the percentage
of the principal amount of the cash notes or Accreted Value of the discount
notes, as the case may be, being redeemed set forth opposite such period in
Column B below.
CASH NOTES
<TABLE>
<CAPTION>
COLUMN A COLUMN B
PERIOD REDEMPTION PRICE
-------- ----------------
<S> <C>
2005........................................................ 105.375 %
2006........................................................ 103.583
2007........................................................ 101.792
2008 and thereafter......................................... 100.000
</TABLE>
DISCOUNT NOTES
<TABLE>
<CAPTION>
COLUMN A COLUMN B
PERIOD REDEMPTION PRICE
-------- ----------------
<S> <C>
2005........................................................ 106.438 %
2006........................................................ 104.292
2007........................................................ 102.146
2008 and thereafter......................................... 100.000
</TABLE>
PARTIAL REDEMPTION: SELECTION AND NOTICE
In the case of any partial redemption, the trustee will select the notes
for redemption:
- in compliance with the requirements of the principal national securities
exchange, if any, on which the notes are listed; or,
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- 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. However, no note of $1,000 or less, in original
principal amount or principal amount at maturity, will be redeemed in
part.
Holdings will send notice by first class mail at least 30, but not more
than 60, days before the redemption date, to each note holder to be redeemed, at
its registered address. Notes called for redemption become due on the date fixed
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 of the partially redeemed note, will be issued in the name of the holder
thereof upon cancellation of the original note.
RANKING
The Indebtedness evidenced by the notes:
- is unsecured Indebtedness of Holdings;
- ranks ratably in right of payment with all existing and future unsecured
Senior Indebtedness of Holdings;
- is senior in right of payment to all existing and future Subordinated
Obligations of Holdings;
- is effectively subordinated to all obligations, including trade payables,
of its subsidiaries; and
- is equal in right of payment with the 2008 notes and the 2009 notes.
In addition, the notes are effectively subordinated to all existing and
future secured Indebtedness of Holdings to the extent of the value of the assets
securing such Indebtedness and are structurally subordinated to all existing and
future Indebtedness and other liabilities of any of Holdings' subsidiaries.
At December 31, 1999, after giving pro forma effect to the offering of the
new notes, Holdings would have had no Indebtedness outstanding other than the
new notes, the 2008 notes and the 2009 notes, and Holdings' subsidiaries would
have had $245.9 million of debt and other liabilities and the ability to borrow
at least $300.0 million under the credit facility, subject to certain
conditions. Although the indentures contain limitations on the amount of
additional Indebtedness which Holdings and its subsidiaries 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," "--Certain
Covenants--Limitation on Indebtedness and Preferred Stock of Restricted
Subsidiaries," and "Risk Factors--We have substantial indebtedness, and
servicing our indebtedness could reduce funds available to grow our business."
Holdings conducts all of its operations through subsidiaries and,
therefore, Holdings depends upon the cash flow of its subsidiaries to meet its
obligations, including its obligations under the notes. Holdings' subsidiaries
are not guarantors of the notes and are separate entities, with no obligation to
make payments on the notes or to make funds available therefor. Generally, with
respect to the assets and earnings of such subsidiaries, priority will be given
to claims of the subsidiaries' creditors, including trade creditors, secured
creditors, creditors holding indebtedness and guarantees issued by the
subsidiaries, and claims of preferred stockholders, if any, of the subsidiaries
over the claims of Holdings' creditors, including holders of the notes. The
notes, therefore, are effectively subordinated to all Indebtedness, preferred
stock, if any, and other liabilities and commitments of Holdings' subsidiaries.
The provisions of our credit facility contain substantial restrictions on the
ability of our subsidiaries to transfer cash or assets to Holdings, by dividend
or distribution. These restrictions can be changed without the consent of note
holders. Although the indentures limit the incurrence of Indebtedness and
preferred stock of certain of Holdings' subsidiaries, such limitation is subject
to a number of significant qualifications. Moreover, the indentures do not
impose any limitation on the subsidiaries' incurrence of liabilities that are
not considered Indebtedness or preferred stock under the indentures and do not
restrict Holdings' subsidiaries from guaranteeing other debt of Holdings. See
"--Certain Covenants--Limitation on Indebtedness and Preferred Stock of
Restricted Subsidiaries" and "Risk Factors--Holdings is a holding company and
its only source of cash to pay
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interest on, and the principal of, the 2008 notes, the 2009 notes and the new
notes is distributions from our subsidiaries."
As of the date of the indentures, all of Holdings' subsidiaries are
Restricted Subsidiaries. However, on April 4, 2000, Holdings' Board of Directors
designated its wholly owned subsidiary, SpectraSite International, Inc., as an
Unrestricted Subsidiary. Under certain circumstances, Holdings may designate
other current or future subsidiaries as Unrestricted Subsidiaries, which will
not be subject to many of the restrictive covenants set forth in the indentures.
CHANGE OF CONTROL
If a Change of Control occurs, each registered holder of notes will have
the right to require Holdings to repurchase all or any part of such holder's
notes, at a purchase price in cash equal to 101% of the Accreted Value or
principal amount as of the repurchase date, plus accrued and unpaid interest, if
any, to the repurchase date.
Within 30 days following any Change of Control, Holdings shall mail a
notice to each holder, with a copy to the trustee, stating:
- that a Change of Control has occurred and that each holder has the right
to require Holdings to purchase such holder's notes at a purchase price
in cash equal to 101% of the Accreted Value or principal amount as of the
repurchase date plus accrued and unpaid interest, if any, to the
repurchase date;
- 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 the Change of Control;
- the repurchase date, which shall be no earlier than 30 days, nor later
than 60 days, from the date such notice is mailed; and
- the instructions Holdings determines, consistent with this covenant, that
a holder must follow in order to have its notes purchased.
The definition of Change of Control includes the phrase all or
substantially all, as used with respect to a sale of assets. The meaning of
substantially all varies according to the facts and circumstances of the subject
transaction. There is no clearly established meaning of substantially all under
New York law, the law governing the indentures, and the phrase thus is subject
to judicial interpretation. Accordingly, in certain circumstances, there may be
uncertainty about 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.
Holdings 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, Holdings will comply with the applicable securities
laws and regulations and will not be deemed to have breached its obligations
under this covenant by virtue of its compliance with the law.
The indentures' provisions relative to Holdings' 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.
Holdings will not be required to make an offer, pursuant to this section of
the indentures, upon a Change of Control, if a third party, in compliance with
the requirements set forth in the indentures applicable to Holdings' Change of
Control, makes an offer to purchase, and purchases, all notes validly tendered
and not withdrawn under such offer.
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CERTAIN COVENANTS
The indentures contain covenants including, among others, the following.
LIMITATION ON INDEBTEDNESS
1. Holdings shall 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 proceeds therefrom, the
Indebtedness to Adjusted EBITDA Ratio of Holdings would be equal to or
less than 7.00:1. Holdings may give pro forma effect to the incurrence
of Indebtedness and the application of proceeds from such incurrence
when determining compliance with the ratio. Accrual of interest,
accretion or amortization of original issue discount and the payment of
interest in the form of additional Indebtedness, will be deemed not to
be an incurrence of Indebtedness for purposes of this covenant.
2. Despite the limitations described in paragraph (1), and regardless of
the amount of Holdings' outstanding Indebtedness, Holdings may incur
any or all of the following Indebtedness:
a. Indebtedness of Holdings owing to and held by any Restricted
Subsidiary; provided, however, that any 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 to constitute an
incurrence of such Indebtedness by Holdings that is not permitted
by this clause (a);
b. Indebtedness represented by the notes issued on the Issue Date;
c. Any of Holdings' Indebtedness outstanding on the Issue Date;
d. Indebtedness, including capital lease obligations, which Holdings
incurs to finance the acquisition, construction or improvement of
fixed or capital assets, in an aggregate principal amount,
together with the amount of any Indebtedness then outstanding and
incurred pursuant to clause (2)(f) of the "--Limitation on
Indebtedness and Preferred Stock of Restricted Subsidiaries"
covenant; not to exceed the greater of:
- $25.0 million and
- an amount equal to 7.5% of Holdings' Consolidated Tangible
Assets, at any one time outstanding;
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 Holdings' Board of Directors determines in good
faith;
e. Refinancing Indebtedness, incurred in respect of any Indebtedness
incurred pursuant to paragraph (1) above, clauses (2)(b) or (c)
above or this clause (2)(e);
f. Indebtedness which is:
- in respect of performance bonds, bankers' acceptances, letters
of credit and surety or appeal bonds provided by Holdings in the
ordinary course of its business, which do not secure other
Indebtedness; and
- incurred by Holdings under currency exchange protection
agreements and interest rate protection agreements which, at the
time of incurrence, are in the ordinary course of its business;
provided, however, that the currency agreements exchange
protection and interest rate protection agreements are directly
related to Indebtedness which Holdings is permitted to incur
pursuant to the indentures;
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g. Indebtedness represented by guarantees, by Holdings, of
Indebtedness which any of Holdings' Restricted Subsidiaries
otherwise is permitted to incur pursuant to the indentures;
h. Indebtedness of any other person, existing at the time such other
person is merged with or into Holdings, and outstanding on, or
prior to, the date on which such person was merged with or into
Holdings, 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 Holdings; provided, however, that on the date of such merger
and after giving it effect, Holdings either (x) would be permitted
to incur at least $1.00 of additional Indebtedness pursuant to
paragraph (1) above or (y) would have had an Indebtedness to
Adjusted EBITDA Ratio immediately after giving effect to such
merger no greater than the Indebtedness to Adjusted EBITDA Ratio
immediately prior to such merger;
i. Indebtedness not to exceed, at any one time outstanding, together
with the amount of any Indebtedness then outstanding and incurred
pursuant to clause (2)(i) of the "--Limitation on Indebtedness and
Preferred Stock of Restricted Subsidiaries" covenant, 2.0 times:
- the sum of 100% of the aggregate Net Cash Proceeds and 50% of the
non-cash proceeds Holdings receives from the issue or sale of its
capital stock, other than Disqualified Stock, subsequent to July
1, 1999, other than an issuance or sale to a Holdings subsidiary
or to an employee stock ownership plan or a trust established by
Holdings or any of its Restricted Subsidiaries, less
- the aggregate amount of such Net Cash Proceeds used to make
Restricted Payments pursuant to clause (1)(c)(ii), or applied
pursuant to clause (2)(a)(ii), of the "--Limitation on Restricted
Payments" covenant;
j. other Indebtedness, in an aggregate principal amount outstanding
at any time, not to exceed $25.0 million, together with the amount
of any Indebtedness and preferred stock then outstanding and
incurred pursuant to clause (2)(j) of the "--Limitation on
Indebtedness and Preferred Stock of Restricted Subsidiaries"
covenant;
k. Indebtedness incurred by Holdings' subsidiaries in compliance with
the "--Limitation on Indebtedness and Preferred Stock of
Restricted Subsidiaries" covenant;
l. Indebtedness incurred under Credit Facilities, in an aggregate
principal amount outstanding at any time, together with the amount
of any Indebtedness then outstanding and incurred under clause (2)
(a) of the "--Limitation on Indebtedness and Preferred Stock of
Restricted Subsidiaries" covenant, not to exceed the sum of:
- the product of $200,000 times the number of Completed Towers on
the date of such incurrence; and
- the product of $1,000,000 times the number of Completed Broadcast
Towers on the date of such incurrence; provided that the amount
of such Indebtedness does not exceed 25% of the cost of acquiring
or constructing such Completed Broadcast Towers;
m. Indebtedness representing the deferred payment of the purchase
price for any entity that is engaged in a Permitted Business and
that becomes a Restricted Subsidiary or the acquisition of any
assets constituting a business or line of business, as determined
by the Board of Directors, that is a Permitted Business, not to
exceed at any one time outstanding, together with any Indebtedness
then outstanding and incurred pursuant to clause 2(k) of the
"--Limitation on Indebtedness and Preferred Stock of Restricted
Subsidiaries" covenant, 50% of the purchase price for the related
entity or business so acquired; provided, however, that after
giving effect to such acquisition and all Indebtedness incurred in
connection therewith, Holdings either (x) would be able to incur
at least $1.00 of additional
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Indebtedness under the "--Limitation on Indebtedness" covenant or (y)
would have an Indebtedness to Adjusted EBITDA Ratio no greater than
prior to such transaction; and
n. Permitted Acquisition Indebtedness.
3. Holdings shall not incur any Indebtedness pursuant to the foregoing
paragraph (2) if it uses the proceeds thereof, directly or indirectly,
to refinance any Subordinated Obligations, unless such new Indebtedness
shall:
a. be subordinated to the notes to at least the same extent as such
Subordinated Obligations being refinanced; and
b. have a Stated Maturity that is no earlier than the earlier of the
Stated Maturity of the notes or the Stated Maturity of the
Subordinated Obligations being refinanced.
4. For purposes of determining compliance with this covenant:
a. in the event that an item of Indebtedness meets the criteria of
more than one of the types of Indebtedness described above,
Holdings, in its sole discretion, will classify (and may from time
to time reclassify) such Indebtedness, and only be required to
include the amount and type of such Indebtedness in one of the
above clauses; and
b. an item of Indebtedness may be divided and classified into more
than one of the types of Indebtedness described above.
LIMITATION ON INDEBTEDNESS AND PREFERRED STOCK OF RESTRICTED SUBSIDIARIES
1. Holdings shall not permit any Restricted Subsidiary to incur, directly
or indirectly, any Indebtedness or preferred stock unless, on the date
of, and after giving effect to, such incurrence and the application of
the net proceeds therefrom, the Indebtedness to Adjusted EBITDA Ratio
of Holdings would be equal to or 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 be deemed not
to be an incurrence of Indebtedness for purposes of this covenant.
2. Despite the above paragraph (1), and regardless of the amount of the
Restricted Subsidiaries' outstanding Indebtedness, any Restricted
Subsidiary may incur any or all of the following Indebtedness:
a. Indebtedness incurred under Credit Facilities, in an aggregate
principal amount outstanding at any time, together with the amount
of any Indebtedness then outstanding and incurred under clause (l)
of the "--Limitation on Indebtedness" covenant, not to exceed the
sum of (x) the product of $200,000 times the number of Completed
Towers on the date of such incurrence and (y) the product of
$1,000,000 times the number of Completed Broadcast Towers on the
date of such incurrence; provided that the amount of such
Indebtedness does not exceed 25% of the cost of acquiring or
constructing such Completed Broadcast Towers;
b. Indebtedness or preferred stock of a Restricted Subsidiary issued
to, and held by, Holdings or a Restricted Subsidiary; provided,
however, that any subsequent issuance or transfer of any capital
stock which results in such Restricted Subsidiary ceasing to be a
Restricted Subsidiary, or any subsequent transfer of such
Indebtedness or preferred stock, other than to Holdings or a
Restricted Subsidiary, shall be deemed to constitute an incurrence
of such Indebtedness or preferred stock by the issuer of such
preferred stock or Indebtedness;
c. Indebtedness or preferred stock of a Restricted Subsidiary
incurred and outstanding on, or prior to, the date on which
Holdings acquired such Restricted Subsidiary, and Indebtedness or
preferred stock of an entity merged into a Restricted Subsidiary,
other than, in either case, 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
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Holdings acquired it or such entity was merged into such Restricted
Subsidiary; provided, however, that on the date of such acquisition or
merger and after giving it effect, Holdings either (x) would be
permitted to incur at least $1.00 of additional Indebtedness pursuant
to paragraph (1) above or (y) would have an Indebtedness to Adjusted
EBITDA Ratio immediately after giving effect to such merger or
acquisition no greater than the Indebtedness to Adjusted EBITDA Ratio
immediately prior to such transaction;
d. Indebtedness or preferred stock outstanding on the Issue Date;
e. Refinancing Indebtedness incurred in respect of Indebtedness or
preferred stock referred to in paragraph (1) above or clauses
(2)(c) and (d) above or this clause (e); provided that
Indebtedness of Holdings may not be refinanced pursuant to this
clause (e);
f. Indebtedness, including capital lease obligations, which a
subsidiary incurs to finance the acquisition, construction or
improvement of fixed or capital assets, in an aggregate principal
amount at any one time outstanding, together with the amount of
any Indebtedness then outstanding and incurred pursuant to clause
(2)(d) of the "--Limitation on Indebtedness" covenant, not to
exceed the greater of (x) $25.0 million and (y) an amount equal to
7.5% of Holdings' Consolidated Tangible Assets; provided, that
such subsidiary incurs such Indebtedness within 180 days after the
date of such acquisition, construction or improvement, and that
the issue price of such Indebtedness does not exceed the fair
market value of such acquired, constructed or improved assets, as
determined in good faith by Holdings' Board of Directors;
g. Indebtedness which is:
i. in respect of performance bonds, bankers' acceptances,
letters of credit and surety or appeal bonds provided in the ordinary
course of its business, which do not secure other Indebtedness; and
ii. incurred under currency exchange protection agreements and
interest rate protection agreements which, at the time of incurrence,
are in the ordinary course of business; provided, however, that the
currency exchange protection agreements and interest rate protection
agreements are directly related to Indebtedness which Holdings or any
of its subsidiaries is permitted to incur pursuant to the indentures;
h. Indebtedness represented by guarantees, by a subsidiary, of
Indebtedness which Holdings or another subsidiary is otherwise
permitted to incur pursuant to the indentures; provided that any
subsidiary which guarantees the 2008 notes or the 2009 notes will
guarantee the new notes; any subsidiary that guarantees the
discount notes will guarantee the cash notes; any subsidiary that
guarantees the cash notes will guarantee the discount notes; in
each case on substantially similar terms;
i. Indebtedness, not to exceed at any one time outstanding together
with the amount of any Indebtedness then outstanding and incurred
pursuant to clause (2)(i) of the "--Limitation on Indebtedness"
covenant, 2.0 times:
- the sum of 100% of the aggregate Net Cash Proceeds and 50% of the
non-cash proceeds Holdings receives from the issue or sale of its
capital stock, other than Disqualified Stock, subsequent to July
1, 1999, other than an issuance or sale to a Holdings subsidiary
or to an employee stock ownership plan or to a trust established
by Holdings or any of its Restricted Subsidiaries, less
- the amount of such Net Cash Proceeds used to make Restricted
Payments pursuant to clause (1)(c)(ii) of the "--Limitation on
Restricted Payments" covenant, or applied pursuant to clause
(2)(a)(ii)of the "--Limitation on Restricted Payments" covenant;
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j. other Indebtedness and preferred stock, in an aggregate principal
and/or liquidation amount, not to exceed at any time outstanding,
$25.0 million, less the amount of any indebtedness then
outstanding and incurred pursuant to clause (2)(j) of the
"--Limitation on Indebtedness" covenant;
k. Indebtedness representing the deferred payment of the purchase
price for any entity that is engaged in a Permitted Business and
that becomes a Restricted Subsidiary or the acquisition of any
assets constituting a business or line of business that is a
Permitted Business, as determined by the Board of Directors, not
to exceed at any one time outstanding, together with any
Indebtedness then outstanding and incurred pursuant to clause 2(m)
of the "--Limitation on Indebtedness" covenant, 50% of the
purchase price for the related entity or business so acquired;
provided, however, that after giving effect to such acquisition
and all Indebtedness incurred in connection therewith, Holdings
either (x) would be able to incur at least $1.00 of additional
Indebtedness under the "--Limitation on Indebtedness" covenant or
(y) would have an Indebtedness to Adjusted EBITDA Ratio no greater
than prior to such transaction; and
l. Permitted Acquisition Indebtedness.
3. For purposes of determining compliance with this covenant:
a. in the event that an item of Indebtedness meets the criteria of
more than one of the types of Indebtedness described above,
Holdings, in its sole discretion, will classify (and may from time
to time reclassify) such Indebtedness, and only be required to
include the amount and type of such Indebtedness in one of the
above clauses; and
b. an item of Indebtedness may be divided and classified into more
than one of the types of Indebtedness described above.
4. Holdings will not permit any Unrestricted Subsidiary to incur any
Indebtedness other than Non-Recourse Debt.
LIMITATION ON RESTRICTED PAYMENTS
1. Holdings will not make, and will not permit any Restricted Subsidiary
to make, directly or indirectly, any Restricted Payment, if at the time
Holdings or the Restricted Subsidiary makes the Restricted Payment:
a. a default or event of default will have occurred and be
continuing, or would result therefrom;
b. except with respect to making an Investment, Holdings could not
incur at least $1.00 of additional Indebtedness under paragraph
(1) of the "--Limitation on Indebtedness" covenant; or
c. the aggregate amount of such Restricted Payment and all other
Restricted Payments, which amount, if other than in cash,
Holdings' Board of Directors will determine in good faith, and
will evidence such determination by a Board of Directors
resolution, declared or made subsequent to the Issue Date, would
exceed the sum of:
i. the aggregate EBITDA (whether positive or negative) accrued
subsequent to July 1, 1999 to the most recent date for which
financial information is available to Holdings, taken as one
accounting period, less 1.4 times Consolidated Interest Expense for
the same period; plus
ii. 100% of the aggregate Net Cash Proceeds, less the aggregate
amount of such Net Cash Proceeds used to incur Indebtedness pursuant
to clause (2)(i) of the "--Limitation on Indebtedness" covenant and
clause (2)(i) of the "--Limitation on Indebtedness and Preferred
Stock of Restricted Subsidiaries" covenant, plus 70% of the GAAP
purchase accounting valuation of Qualified Proceeds, with each such
valuation calculated as of the
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sale date of the capital stock received as consideration therefor, in
each case received by Holdings from the issue or sale of capital
stock, other than Disqualified Stock, subsequent to July 1, 1999,
other than an issuance or sale to one of Holdings' subsidiaries, and
other than an issuance or sale to an employee stock ownership plan,
or to a trust established by Holdings or any of its Restricted
Subsidiaries; plus
iii. the amount by which Holdings' Indebtedness is reduced on
Holdings' balance sheet, upon conversion or exchange, other than by a
Restricted Subsidiary, subsequent to the Issue Date of any Holdings
Indebtedness which is convertible or exchangeable for Holdings'
capital stock, other than Disqualified Stock, less the amount of any
cash, or the fair value of any other property, distributed by
Holdings upon such conversion or exchange; plus
iv. an amount equal to the sum of the net reduction in
Investments in Unrestricted Subsidiaries resulting from dividends,
repayments of loans or advances, or other transfers of assets to
Holdings or any Restricted Subsidiary from Unrestricted Subsidiaries,
plus the portion, proportionate to Holdings' 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; plus
v. dividends and distributions Holdings receives, subsequent to
the Issue Date, from Unrestricted Subsidiaries, to the extent such
dividends and distributions are not otherwise included in calculating
EBITDA; plus
vi. Net Cash Proceeds Holdings receives, subsequent to the
Issue Date, from Investments that are not Permitted Investments, to
the extent not otherwise included in calculating EBITDA.
The sum in clause (iv) above shall not exceed, in the case of any
Unrestricted Subsidiary, the amount of Investments Holdings or any Restricted
Subsidiary previously made in such Unrestricted Subsidiary, which amount was
included in the calculation of the amount of Restricted Payments.
2. The provisions of paragraph (1) of this covenant will not prohibit:
a. any purchase, redemption, defeasance or other acquisition of
Holdings' capital stock or Subordinated Obligations made by
exchange for, or out of the net proceeds of the substantially
concurrent sale of, Holdings' capital stock, other than
Disqualified Stock and other than capital stock issued or sold to
a Holdings subsidiary, or an employee stock ownership plan, or a
trust established by Holdings or any of its subsidiaries;
provided, however, that:
i. such purchase, redemption, defeasance or other acquisition
will be excluded in the calculation of the amount of Restricted
Payments; and
ii. 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 (1)(c)(ii) above, clause (2)(i) of the
"--Limitation on Indebtedness" covenant and clause (2)(i) of the
"--Limitation on Indebtedness and Preferred Stock of Restricted
Subsidiaries" covenant;
b. 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, Holdings'
Subordinated Obligations; provided, however, that:
i. 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;
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ii. such new Indebtedness is subordinated to the notes at least
to the same extent as the Subordinated Obligations so purchased,
exchanged, redeemed, repurchased, acquired or retired for value;
iii. 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;
iv. such new Indebtedness has an Average Life equal to or
greater than the lesser of the Average Life of the Indebtedness being
so redeemed, repurchased, acquired or retired and the Average Life of
the notes; and
v. any purchase, redemption, defeasance or other acquisition
made pursuant to this clause 2(b) will be excluded in the calculation
of the amount of Restricted Payments;
c. dividends paid within 60 days after the date of their declaration,
if at such date of declaration such dividend would have complied
with this covenant; and
d. purchases of outstanding shares of SpectraSite's capital stock
from former employees, in an amount not to exceed $5.0 million in
the aggregate.
Any dividend or purchase made pursuant to (2)(c) or 2(d), above will be
included in the calculation of Restricted Payments.
The Restricted Payments described in clauses (2)(a), (b) and (d) above
shall not be permitted if at the time of, and after giving effect to, such
Restricted Payments, a default or an event of default shall have occurred and be
continuing.
The amount of any Investment shall be measured on the date made and shall
not give effect to subsequent changes in value.
LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED SUBSIDIARIES
Holdings 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:
1. pay dividends or make any other distributions on its capital stock to
Holdings or to a Restricted Subsidiary, or pay any Indebtedness or
other obligation owed to Holdings;
2. make any loans or advances to Holdings; or
3. transfer any of its property or assets to Holdings or any Restricted
Subsidiary, except:
a. any encumbrance or restriction pursuant to a Credit Facility or
any agreement in effect on the Issue Date;
b. any encumbrance or restriction, with respect to a Restricted
Subsidiary, pursuant to an agreement relating to any Indebtedness
or capital stock that it incurred or issued on, or prior to, the
date on which Holdings or a Restricted Subsidiary acquired it,
other than Indebtedness or capital stock incurred or issued as
consideration for, or to provide 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 Holdings or a Restricted
Subsidiary acquired it, and outstanding on such date;
c. any encumbrance or restriction pursuant to an agreement effecting
a refinancing of Indebtedness incurred, pursuant to an agreement
referred to in clause (a) or (b) above, or contained in any
amendment to an agreement referred to in clause (a) or (b) above;
provided, however, that the encumbrances and restrictions
contained in any such refinancing agreement or amendment, taken as
a whole, with respect to a Restricted Subsidiary, are no
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less favorable to the holders of the notes than the encumbrances and
restrictions with respect to such Restricted Subsidiary contained in
such predecessor agreements, as determined by Holdings' Board of
Directors in good faith;
d. in the case of paragraph (3), 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 or such lease, license or other
contract;
e. in the case of paragraph (3), contained in security agreements or
mortgages securing a Restricted Subsidiary's Indebtedness, to the
extent such encumbrance or restrictions restrict the transfer of
the property subject to such security agreements or mortgages;
f. 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 of such Restricted Subsidiary's
capital stock or assets, pending the closing of such sale or
disposition;
g. customary provisions with respect to the disposition or
distribution of assets or property in joint venture and other
similar agreements; and
h. restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of
business; provided that the Board of Directors determines that
such restrictions will not have a material adverse impact on
Holdings' ability to make payments on the notes.
LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK
1. Holdings will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, consummate any Asset Disposition unless:
a. Holdings 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 the Holdings Board of Directors determines in
good faith, of the shares and assets subject to such Asset
Disposition; and
b. except in the case of a Tower Asset Exchange, at least 75% of the
consideration Holdings or such Restricted Subsidiary receives is
in the form of cash or cash equivalents.
2. Within 365 days after the receipt of any Net Available Cash from an
Asset Disposition, Holdings 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 Restricted Subsidiary of Holdings,
provided that the applicable Restricted Subsidiary also may
prepay, repay, redeem or purchase its own outstanding
Indebtedness, or Senior Indebtedness, in each case other than
Indebtedness owed to Holdings or an Affiliate of Holdings;
b. make an offer with respect to the 2008 notes or the 2009 notes to
the extent required in the indentures governing the 2008 notes and
the 2009 notes, respectively;
c. acquire all or substantially all of the assets of an entity
engaged in a Permitted Business;
d. acquire Voting Stock of an entity engaged in a Permitted Business
from a person that is not a Holdings subsidiary; provided, that
after giving effect thereto, Holdings or its Restricted Subsidiary
owns a majority of such Voting Stock, and such acquisition
otherwise is made in accordance with the indentures, including,
without limitation, the "--Limitation on Restricted Payments"
covenant; or
e. make a capital expenditure or acquire other long-term assets that
are used or useful in a Permitted Business.
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To the extent of the balance of such Net Available Cash, after
application in accordance with clause (2)(a), (b), (c), (d), or (e)
above, Holdings shall make an offer to the holders to purchase notes
pursuant to, and subject to, the conditions set forth below.
3. Notwithstanding the foregoing provisions, Holdings and its Restricted
Subsidiaries shall not be required to apply any Net Available Cash in
accordance with this covenant, except to the extent that the aggregate
Net Available Cash from all Asset Dispositions which is not applied in
accordance with this covenant exceeds $10.0 million. Pending
application of Net Available Cash pursuant to this covenant, such Net
Available Cash shall be invested in Permitted Investments.
4. For the purposes of this covenant, the following are deemed to be cash:
a. the transferee's assumption of other than Holdings' Indebtedness,
other than Holdings' Disqualified Stock, and other than
Indebtedness that is subordinated to the notes, or any Restricted
Subsidiary's Indebtedness and the release of Holdings or the
Restricted Subsidiary from all liability on such Indebtedness in
connection with the Asset Disposition;
b. securities that Holdings or any Restricted Subsidiary receives
from the transferee, that Holdings or the Restricted Subsidiary
converts into cash within 20 days of the applicable Asset
Disposition, to the extent of the cash received; and
c. the transferee's assumption of any of Holdings' or any Restricted
Subsidiary's liabilities, as shown on Holdings' or such Restricted
Subsidiary's most recent balance sheet, other than contingent
liabilities and liabilities that are by their terms subordinated
to the notes or any guarantee thereof, pursuant to a customary
novation agreement that releases Holdings or the Restricted
Subsidiary from further liability.
5. In the event of an Asset Disposition that requires an offer to purchase
notes pursuant to paragraph (2) of this covenant, Holdings will be
required to purchase notes tendered, pursuant to Holdings' offer for
the notes, at a purchase price of:
- 100% of their Accreted Value or principal amount as of the
purchase date, without premium, plus
- accrued and unpaid interest to the purchase date, in accordance
with the procedures, including prorating in the event of
oversubscription, set forth in the indentures.
If the aggregate purchase price for notes tendered pursuant to the offer is
less than the Net Available Cash allotted to the notes purchase, Holdings may
use any remaining Net Available Cash for general corporate purposes not
otherwise prohibited by the indentures.
If the aggregate purchase price for notes tendered pursuant to the offer is
greater than the Net Available Cash allotted to the notes purchase, the trustee
will select the notes to be purchased on the basis set forth under
"--Redemption--Partial Redemption: Selection and Notice" above. Upon completion
of any required offer to the holders, the amount of Net Available Cash will be
reset at zero. Holdings 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 paragraph (2) of this covenant, is
less than $10.0 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.
6. Holdings 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 a notes repurchase pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, Holdings will
comply with the applicable securities laws and regulations and will not
be deemed to have breached its obligations under this covenant by
virtue of its compliance with the law.
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7. 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
1. Holdings 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 Holdings Affiliate unless:
a. the terms of such transaction, taken as a whole, are no less
favorable to Holdings 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 an
Affiliate;
b. in the event such affiliate transaction involves an aggregate
amount in excess of $5.0 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 the affiliate transaction satisfies the criteria
in clause (1)(a) above; and
c. in the event such affiliate transaction involves an aggregate
amount in excess of $10.0 million, Holdings has received a written
opinion from a nationally recognized independent investment
banking firm that such affiliate transaction is fair to Holdings
and its Restricted Subsidiaries from a financial point of view.
2. The provisions of paragraph (1) above shall not prohibit:
a. any Restricted Payment permitted to be made pursuant to the
"--Limitation on Restricted Payments" covenant;
b. any securities issuance, 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;
c. the grant of stock options or similar rights to Holdings employees
and directors, pursuant to plans approved by the Board of
Directors;
d. loans or advances to employees, in the ordinary course of
business, in accordance with Holdings' or its Restricted
Subsidiaries' past practices;
e. the payment of reasonable fees to directors of Holdings and its
Restricted Subsidiaries who are not employees of Holdings or its
Restricted Subsidiaries;
f. any transaction between Holdings and a Restricted Subsidiary or
between Restricted Subsidiaries;
g. the issuance or sale of any Holdings capital stock, other than
Disqualified Stock;
h. any transaction, consummated pursuant to the terms of any
agreement described in Holdings' Form 10-K for the year ended
December 31, 1999, including the exhibits and documents included
or incorporated by reference therein, giving effect to any
subsequent supplements, amendments, modifications or alterations
thereof that are approved by the disinterested members of
Holdings' Board of Directors;
i. any transaction in the ordinary course of business between
Holdings or any Restricted Subsidiary and any Affiliate of
Holdings relating to the acquisition, management, construction,
leasing or licensing of towers, provided, however, that such
transaction is on terms that are no less favorable, taken as a
whole, to Holdings or the relevant Restricted Subsidiary than
those that could have been obtained in a comparable transaction by
Holdings or such Restricted Subsidiary with an unrelated person or
is otherwise on terms that, taken as a
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whole, Holdings has determined to be fair to Holdings or the relevant
Restricted Subsidiary; and
j. any transaction between Holdings or any of its Restricted
Subsidiaries and any of its Affiliates involving ordinary course
investment banking, commercial banking or related activities.
LIMITATION ON LIENS
Holdings will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, create, or permit to exist, any Lien, other than
Permitted Liens, on any of its property or assets, including capital stock,
whether owned on the Issue Date or thereafter acquired, securing any obligation,
unless effective provision is made contemporaneously to secure the notes equally
and ratably with or, in the case of Subordinated Obligations, on a senior basis
to, such obligation, for so long as the obligation is so secured.
LIMITATION ON SALE OR ISSUANCE OF CAPITAL STOCK OF RESTRICTED SUBSIDIARIES
Holdings will not, and will not permit any Restricted Subsidiary to,
transfer, convey, sell, lease, or otherwise dispose of any Restricted
Subsidiary's capital stock, to any person, other than to Holdings or to a wholly
owned subsidiary of Holdings, and will not permit any Restricted Subsidiary to
issue any of its capital stock to any person, other than to Holdings or a
subsidiary of Holdings, and other than shares of its capital stock constituting
directors' qualifying shares or the ownership by foreign nationals of capital
stock of any Restricted Subsidiary, to the extent necessary or mandated by
applicable law, unless in either case:
a. Holdings' and its Restricted Subsidiaries' minority equity
interest in such person, after giving effect to any such
disposition, would be permitted under the "--Limitation on
Restricted Payments" covenant; 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.
LIMITATION ON SALE/LEASEBACK TRANSACTIONS
Holdings will not, and will not permit any Restricted Subsidiary to, enter
into any Sale/Leaseback Transaction with respect to any property unless:
1. Holdings 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;
2. the net cash proceeds received by Holdings or any Restricted Subsidiary
in connection with such Sale/Leaseback Transaction are at least equal
to the fair value of such property, as determined by Holdings' Board of
Directors in good faith; and
3. the transfer of such property is permitted by, and Holdings 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 Holdings may not be required to remain subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, Holdings will
file with the SEC, unless the SEC does not permit such filing, and provide the
trustee and note holders with, the annual reports and such information,
documents and other reports which are specified in Sections 13 and 15(d) of the
Exchange Act. Holdings also will comply with the other provisions of the Trust
Indenture Act Section 314(a).
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MERGER AND CONSOLIDATION
Holdings will not, in one transaction or a series of transactions,
consolidate with or merge with or into, or convey, transfer or lease, all or
substantially all of its assets to, any person, unless:
1. 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 Holdings, will expressly assume, by
supplemental indenture, executed and delivered to the trustee, in form
satisfactory to the trustee, all of Holdings' obligations under the
notes and the indentures;
2. 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;
3. except (A) in the case of a merger of Holdings into a wholly owned
subsidiary, (B) a merger Holdings enters into solely for the purpose of
reincorporating in another jurisdiction, or (C) a merger Holdings
enters into solely for the purpose of forming a holding company to hold
all of the outstanding capital stock of Holdings 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, Holdings, or the person formed by, or surviving, any
such consolidation or merger, if other than Holdings, or to which such
conveyance, transfer, lease or other disposition shall have been made,
either (x) would have been permitted to incur at least $1.00 of
additional Indebtedness pursuant to paragraph (1) of the "--Limitation
on Indebtedness" covenant above or (y) would have had an Indebtedness
to Adjusted EBITDA Ratio immediately after giving effect to such
consolidation, merger, conveyance, transfer, lease or other disposition
no greater than the Indebtedness to Adjusted EBITDA Ratio immediately
prior to such transaction; and
4. Holdings 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
indentures, as set forth in the indentures.
The Successor Issuer will succeed to, and be substituted for, and may
exercise every right and power of, Holdings under the indentures, and the
predecessor issuer, in the case of a conveyance, transfer or lease of all or
substantially all of its assets, will be released from the obligations under the
indentures 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 indentures as:
1. a default in any interest payment, when due, on any note, continued for
30 days;
2. a default in the payment of principal, when due, of any note at its
Stated Maturity, upon optional redemption, upon required repurchase,
upon declaration or otherwise;
3. Holdings' failure to comply with its obligations under "--Merger and
Consolidation;"
4. Holdings' failure to comply, for 30 days after notice, with any of its
obligations under the covenants described under "--Change of Control"
or "--Certain Covenants;"
5. Holdings' failure to comply, for 60 days after notice, with its other
agreements contained in the indentures;
6. Holdings' failure, or the failure of any of Holdings' Significant
Subsidiaries, 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
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Indebtedness, unpaid or accelerated, exceeds $10.0 million or its
foreign currency equivalent (the cross acceleration provision);
7. certain events of bankruptcy, insolvency or reorganization of Holdings
or any of Holdings' Significant Subsidiaries (the bankruptcy
provisions); or
8. any final judgment or decree, for the payment of money in excess of
$10.0 million, is rendered against Holdings or any of Holdings'
Significant Subsidiaries, net of any amounts with respect to which a
creditworthy insurance company has acknowledged full liability, subject
to any deductible amounts of less than $10.0 million required to be
paid by Holdings in accordance with the applicable insurance policy,
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 the judgment and is not discharged, waived or
stayed within 10 days after notice (the judgment default
provision).
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 (4), (5) and (8) above 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 Holdings, as
provided in the indentures, of the default and Holdings does not cure such
default within the time specified in clauses (4) and (5) above, after it
receives 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 Holdings, may declare the Accreted Value or principal amount
of, and accrued but unpaid interest on, all the notes to be due and payable.
Upon such a declaration, such Accreted Value or principal amount and interest
will be due and payable immediately. If an event of default relating to certain
events of bankruptcy, insolvency or reorganization of Holdings occurs and is
continuing, the Accreted Value or principal amount of, and accrued interest on,
all the notes automatically will become due and payable immediately, 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 indentures 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
indentures, at the request or direction of any of the holders of notes, 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 indentures or the notes unless:
- such holder shall have previously given the trustee notice that an event
of default is continuing;
- holders of at least 25%, in aggregate principal amount at maturity, of
the outstanding notes shall have requested the trustee to pursue the
remedy;
- such holders shall have offered the trustee reasonable security or
indemnity against any loss, liability or expense;
- 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
- 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.
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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 of notes, or that would involve the trustee in
personal liability.
The indentures provide 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 note holders. In addition, Holdings 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. Holdings also is required to deliver to
the trustee, within 30 days after its knowledge of the occurrence of such event,
written notice of any event which would constitute certain defaults, their
status, and what action Holdings is taking, or proposes to take, in respect of
such event.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the indentures may be amended, 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:
- reduce the amount of notes whose holders must consent to an amendment;
- reduce the rate of, or extend the time for, payment of interest on any
note;
- reduce the principal of, or extend the Stated Maturity of, any note;
- reduce the premium payable upon the redemption of any note, or change the
time at which any note may be redeemed, as described under "Terms of
Optional Redemption;"
- make any note payable in money other than that stated in the note;
- 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
- make any change in the amendment provisions which require each holder's
consent, or in the waiver provisions.
Without the consent of any holder, Holdings and the trustee may amend the
indentures to cure any ambiguity, omission, defect or inconsistency, to provide
for the assumption by a successor corporation of Holdings' obligations under the
indentures, 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 Internal Revenue Code, or
in a manner such that the uncertificated notes are as described in Section
163(f)(2)(B) of the Internal Revenue Code, to add guarantees with respect to the
notes, to secure the notes, to add to Holdings' covenants for the benefit of the
note holders, or to surrender any right or power conferred upon Holdings, to
make any change that does not, in the good faith opinion of Holdings' Board of
Directors, materially adversely affect the rights of any holder, and to comply
with any requirement of the SEC in connection with the qualification of the
indentures under the Trust Indenture Act.
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The holders' consent is not necessary, under the indentures, 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 an indenture becomes effective, Holdings is
required to mail to the holders a notice briefly describing such amendment.
However, the failure to give such notice to all holders, or any defect therein,
will not impair or affect the validity of the amendment.
TRANSFER AND EXCHANGE
A holder may transfer or exchange notes in accordance with the indentures.
Upon any transfer or exchange, the registrar and the trustee may require a
holder, among other things, to furnish appropriate endorsements and transfer
documents, and Holdings may require a holder to pay any taxes required by law or
permitted by the indentures, including any transfer tax or other similar
governmental charge payable in connection therewith. Holdings 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
Holdings at any time may terminate all its obligations under the notes and
the indentures (legal defeasance), except for certain obligations, including:
- those respecting the defeasance trust and obligations to register the
transfer or exchange of the notes;
- the obligation to replace mutilated, destroyed, lost or stolen notes; and
- maintenance of a registrar and paying agent in respect of the notes.
Holdings 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 clause (3) under "--Merger and
Consolidation" (covenant defeasance).
Holdings may exercise its legal defeasance option notwithstanding its prior
exercise of its covenant defeasance option. If Holdings exercises its legal
defeasance option, payment of the notes may not be accelerated because of an
event of default with respect thereto. If Holdings exercises its covenant
defeasance option, payment of the notes may not be accelerated because of an
event of default as specified in clauses (4), (5), (6), (7) with respect to
Significant Subsidiaries only, or (8) under "--Defaults," or because of
SpectraSite's failure to comply with clause (3) under "--Merger and
Consolidation."
In order to exercise either defeasance option with respect to either
tranche of notes, Holdings must deposit, or cause to be deposited, irrevocably
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 such notes, except lost, stolen or destroyed notes which have been
replaced or repaid, to maturity or redemption, as the case may be. Holdings must
comply with certain other conditions, including delivery to the trustee of an
opinion of counsel to the effect that holders of such 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, in the same manner, and at the same times as would have been the case
if such deposit and defeasance had not
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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 Holdings director, officer, employee, incorporator or stockholder, as
such, shall have any liability for any of Holdings' obligations under the notes
or the indentures, or for any claim based on, in respect of, or by reason of,
such obligations or their creation. Each note holder, 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 or state 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 for each indenture,
and Holdings has appointed it 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 indentures provide 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 person in the conduct of
his or her own affairs. Subject to such provisions, the trustee will be under no
obligation to exercise any of its rights or powers under the indentures at the
request of any note holder, 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 indentures.
GOVERNING LAW
Each of the indentures 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 indentures. Reference
is made to the indentures for a full disclosure of all such terms.
Accreted Value means an amount per $1,000 principal amount at maturity of
the notes that is equal to (a) as of any date prior to March 15, 2005, the sum
of (x) the initial offering price of each note and (y) the portion of the excess
of the principal amount at maturity of each note over such initial offering
price which shall have been amortized through such date, such amount to be so
amortized on a daily basis and compounded semi-annually on each March 15 and
September 15 at the rate of 12.875% per annum from the Issue Date through the
date of determination computed on the basis of a 360-day year of twelve 30-day
months and (b) as of any date after March 15, 2005, $1,000. With respect to the
cash notes, Accreted Value means $1,000 per $1,000 principal amount at maturity.
Adjusted EBITDA as of any date of determination, means the sum of:
1. Holdings' EBITDA for the four most recent full fiscal quarters ending
prior to such date, less Holdings' Tower EBITDA for such four-quarter
period; plus
2. the product of four times Holdings' Tower EBITDA for the most recent
quarter. The Tower EBITDA for the most recent quarter shall be
determined on a pro forma basis after giving effect to:
a. all acquisitions or dispositions of assets Holdings and its
subsidiaries make, from the beginning of such quarter through, and
including, the date of determination, including any
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related financing transactions, as if the acquisitions and
dispositions had occurred at the beginning of the quarter;
b. any new lease or Site Management Contract Holdings or any
Restricted Subsidiary enters into in the ordinary course of
business, with respect to Tower Assets, from the beginning of the
quarter through, and including, such date of determination, as if
such new lease or Site Management Contract had been signed at the
beginning of the quarter, and Holdings or a Restricted Subsidiary
had received the rent required by the terms of such lease or Site
Management Contract for such quarter during the quarter;
c. the loss from the beginning of the quarter through, and including,
the date of determination of any lease or Site Management Contract
Holdings or a Restricted Subsidiary has entered into, with respect
to any Tower Assets, that was in effect on the first day of the
quarter, as if the lease or Site Management Contract had not been
in effect during such quarter, and no rent under the lease had
been received during the quarter; and
d. any rent increases Holdings or any Restricted Subsidiary receives,
during the period beginning on the first day of the quarter and
ending on the date of determination related to leases or Site
Management Contracts on Tower Assets, as if the increased rental
rate had been in effect at the beginning of the quarter and
Holdings or a Restricted Subsidiary had received the increased
amount of rent during such quarter.
For purposes of making the computation referred to above:
i. acquisitions that Holdings or any of its Restricted Subsidiaries
has made, 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 the reference period shall be calculated without giving
effect to clause (2) of the proviso set forth in the definition of
Consolidated Net Income; and
ii. 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 correlative meanings.
Asset Disposition means any sale, lease, transfer, or other disposition, or
series of related sales, leases, transfers, or dispositions, by Holdings or any
Restricted Subsidiary, including any disposition by means of a merger,
consolidation, or similar transaction, of:
1. any shares of a Restricted Subsidiary's capital stock, other than
directors' qualifying shares, or shares required, by applicable law, to
be held by a Person other than Holdings or a Restricted Subsidiary;
2. all or substantially all the assets of any of Holdings' or any
Restricted Subsidiary's division or line of business; or
3. any other of Holdings' or any Restricted Subsidiary's assets outside of
the ordinary course of business;
other than in the case of clauses (1), (2) and (3) above:
- a disposition by a Restricted Subsidiary, to Holdings, or by Holdings or
a Restricted Subsidiary to another Restricted Subsidiary:
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- a disposition that constitutes a Restricted Payment permitted by the
covenant described under "--Limitation on Restricted Payments";
- a disposition of assets with a fair market value of less than $5.0
million;
- any transaction not prohibited by the covenant under "--Limitation on
Restricted Payments" or that constitutes a Permitted Investment;
- grants of leases or licenses in the ordinary course of business; and
- 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
the Sale/Leaseback Transaction, including any period for which the 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:
1. 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, times the amount of such payment;
2. the sum of all such payments.
Board of Directors means Holdings' Board of Directors, or any committee
thereof duly authorized to act on behalf of the 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.
Change of Control means the occurrence of any of the following events:
1. any person, as such term is used in Exchange Act Sections 13(d) and
14(d), other than one or more Permitted Holders, is or becomes the
beneficial owner, as defined in Exchange Act Rules 13d-3 and 13d-5,
except that for purposes of this paragraph (1) such person shall be
deemed to have beneficial ownership of all shares that 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 Holdings' Voting Stock; provided,
however, that the Permitted Holders beneficially own, directly or
indirectly, in the aggregate, a lesser percentage of the total voting
power of Holdings' Voting Stock 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 Holdings Board of
Directors;
For purposes of this paragraph (1), (a) 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,
directly or indirectly, of more than 35% of the voting power of the
parent entity's Voting Stock, and the Permitted Holders beneficially
own, directly or indirectly, in the aggregate, a lesser percentage of
the total voting power of the parent entity's Voting Stock 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 parent entity's board of directors, and (b) the Permitted Holders
shall be deemed to beneficially own any Voting Stock of an entity held
by any other parent entity, so long as the Permitted Holders
beneficially own, directly or indirectly, in the aggregate, a majority
of the voting power of the parent entity's Voting Stock;
2. 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 Holdings' Board of Directors,
together with any new directors whose election by Holdings' Board of
Directors or whose nomination for election by
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Holdings' shareholders was approved by a vote of a majority of
Holdings' directors 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 Holdings Board of Directors then in office;
3. Holdings' merger or consolidation with or into another person or the
merger of another person with or into Holdings, if Holdings' securities
that are outstanding immediately prior to such transaction and which
represent 100% of the aggregate voting power of Holdings' Voting Stock
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; and
4. the sale of all or substantially all of Holdings' assets to another
person, other than a Permitted Holder or a person that is controlled by
the Permitted Holders.
Completed Broadcast Tower means a communications tower of at least 500
feet, other than a Completed Tower, with, as of the date of any determination:
- at least one broadcast tenant that has executed a definitive lease or
Site Management Contract with Holdings or any of its Restricted
Subsidiaries; and
- capacity for at least one other tenant.
Completed Tower means a communications transmission tower with, as of any
date of determination:
- at least one anchor tenant that has executed a definitive lease or Site
Management Contract with Holdings or any of its Restricted Subsidiaries;
and
- capacity for at least three tenants.
Consolidated Indebtedness as of any date of determination means, without
duplication:
- the total amount of Indebtedness of Holdings and its Restricted
Subsidiaries;
- the total amount of Indebtedness of any other person, to the extent that
such Indebtedness has been guaranteed by Holdings or one or more of its
Restricted Subsidiaries; and
- the aggregate liquidation value of all of Holdings' Disqualified Stock
and all preferred stock of Holdings' Restricted Subsidiaries not owned by
Holdings or a Restricted Subsidiary, in each case determined on a
consolidated basis in accordance with GAAP.
Consolidated Interest Expense means, for any period, the total interest
expense of Holdings and its consolidated Restricted Subsidiaries, plus, to the
extent not included in such total interest expense, and to the extent incurred
by Holdings or its Restricted Subsidiaries, without duplication:
1. interest expense attributable to capital leases and to leases
constituting part of a Sale/Leaseback Transaction;
2. amortization of debt discount and debt issuance cost;
3. capitalized interest;
4. non-cash interest expense;
5. commissions, discounts, and other fees and charges owed with respect
to letters of credit and bankers' acceptance financing;
6. net costs associated with hedging obligations, including amortization
of fees;
7. preferred stock dividends paid in respect of all of Holdings' and its
subsidiaries' preferred stock, held by persons other than Holdings or
a wholly owned subsidiary of Holdings;
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8. interest incurred in connection with Investments in discontinued
operations;
9. interest accruing on any Indebtedness of any other person, to the
extent such Indebtedness is guaranteed by, or secured by the assets
of, Holdings or any Restricted Subsidiary; and
10. 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 Holdings, in
connection with Indebtedness incurred by such plan or trust.
Consolidated Net Income means, for any period, the net income or loss of
Holdings and its consolidated Subsidiaries. The following, however, shall not be
included in such Consolidated Net Income:
1. any net income or loss of any person, other than Holdings, if such
person is not a Restricted Subsidiary, except that, subject to the
exclusion contained in clause (4) below, Holdings' equity in the net
income of any such person 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 Holdings 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 (3) below;
2. any net income or loss of any person, acquired by Holdings or a
subsidiary, in a pooling of interests transaction for any period prior
to the date of such acquisition;
3. any Restricted Subsidiary's net income, if the Restricted Subsidiary is
subject to restrictions, other than any restrictions permitted in the
"--Limitations on Restrictions on Distributions from Restricted
Subsidiaries" covenant, directly or indirectly, on the payment of
dividends or the making of distributions, directly or indirectly, to
Holdings, except that:
a. subject to the exclusion contained in clause (4) below, Holdings'
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 the
Restricted Subsidiary during such period to Holdings 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, Holdings' equity in a net loss of any such
Restricted Subsidiary, for such period, shall be included in
determining such Consolidated Net Income;
4. any gain or loss realized upon the sale or other disposition of any
assets of Holdings, its consolidated subsidiaries, or any other person,
including pursuant to any Sale/Leaseback Transaction, which are 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;
5. any Unrestricted Subsidiary's net income or loss, except to the extent
distributed to Holdings or one of its subsidiaries;
6. any extraordinary gain or loss; and
7. the cumulative effect of a change in accounting principles.
Notwithstanding the foregoing, only for the purposes of the covenant
described under "--Certain Covenants--Limitation on Restricted Payments," there
shall be excluded from Consolidated Net Income, any dividends, repayments of
loans or advances, or other transfers of assets, from Unrestricted Subsidiaries,
to Holdings 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 (1)(c)(iv) thereof.
Consolidated Tangible Assets means, with respect to Holdings, the total
consolidated tangible assets of Holdings and its Restricted Subsidiaries, as
shown on the most recent internal consolidated balance sheet of Holdings and the
Restricted Subsidiaries, calculated on a consolidated basis in accordance with
GAAP.
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Credit Facility means any debt or credit facility, commercial paper
facility providing for revolving credit loans, term loans, accounts receivable
financing, including through the sale of accounts receivable to such lenders or
to special purpose entities formed to borrow from such lenders against such
accounts receivable, or letters of credit, or other non-convertible debt
securities or other form of debt financing, in each case, as amended, restated,
supplemented, extended, modified, renewed, refunded, replaced or refinanced in
whole or in part from time to time, including any amendment, restatement,
supplement, extension, modification, renewal, refunding, replacement or
refinancing that increases the amount borrowable under any such facility or
alters the maturity of any such facility.
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:
1. matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise;
2. is convertible or exchangeable at the option of the holder for
Indebtedness or Disqualified Stock; or
3. 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.
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 materially more
favorable taken as a whole to the holders of such capital stock than the
provisions described under "--Change of Control" and "--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:
1. Consolidated Interest Expense;
2. all income tax expense of Holdings and its consolidated Restricted
Subsidiaries;
3. depreciation expense of Holdings and its consolidated Restricted
Subsidiaries;
4. amortization expense of Holdings and its consolidated Restricted
Subsidiaries, excluding amortization expense attributable to a prepaid
cash item that was paid in a prior period;
5. all other non-cash charges of Holdings 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
6. 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 paid to Holdings in the form of a dividend by the
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 permitted in the "--Limitations on Restrictions
on Distributions from Restricted Subsidiaries" covenant.
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Equity Offering means a public or private issuance by Holdings of its
common stock for cash.
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:
1. the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants;
2. statements and pronouncements of the Financial Accounting Standards
Board;
3. such other statements by such other entity as approved by a significant
segment of the accounting profession; and
4. 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.
Indebtedness means, with respect to any person on any date of
determination, without duplication:
1. 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;
2. all capital lease obligations of such person, and all Attributable Debt
in respect of Sale/Leaseback Transactions entered into by such person;
3. 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;
4. 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 (1) through (3) 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;
5. 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;
6. all obligations of the type referred to in clauses (1) through (5)
above, 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;
7. all obligations of the type referred to in clauses (1) through (6)
above, 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
8. to the extent not otherwise included in this definition, hedging
obligations of such person.
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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 of such Indebtedness, 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:
- Consolidated Indebtedness as of such date;
- Adjusted EBITDA.
Investment in any person means any direct or indirect advance, loan, other
than advances to customers, lessees or licensees 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 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 the "--Limitation on
Restricted Payments" covenant:
1. Investment shall include the portion, proportionate to Holdings' equity
interest in such subsidiary of the fair market value of the net assets
of any of Holdings' subsidiaries at the time that such subsidiary is
designated an Unrestricted Subsidiary; provided, however, that upon a
redesignation of such subsidiary as a Restricted Subsidiary, Holdings
shall be deemed to continue to have a permanent Investment in an
Unrestricted Subsidiary of an amount, if positive, equal to:
a. Holdings' Investment in such subsidiary at the time of such
redesignation;
b. the portion, proportionate to Holdings' equity interest in such
subsidiary, of the fair market value of the net assets of the
subsidiary at the time the subsidiary is so re-designated a
Restricted Subsidiary; and
2. 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 the Board of Directors determines in good faith, and evidenced
by a Board of Directors resolution.
Issue Date means March 15, 2000.
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,
from such Asset Disposition, in each case net of:
1. 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;
2. 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;
3. 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;
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4. 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
Holdings or any Restricted Subsidiary after such Asset Disposition; and
5. 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.
Non-Recourse Debt means Indebtedness:
1. as to which neither Holdings 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
2. as to which no default, 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 of Holdings' or any Restricted Subsidiary's Indebtedness, to
declare a default under such other Indebtedness, or cause the payment
thereof to be accelerated or payable prior to its stated maturity.
Permitted Acquisition Indebtedness means Indebtedness or acquired debt in
aggregate principal amount not to exceed $50.0 million at any one time
outstanding, incurred or assumed in connection with the acquisition of an entity
that is engaged in a Permitted Business and that becomes a Restricted Subsidiary
or the acquisition of any assets constituting a business or line of business, as
determined by the Board of Directors, that is a Permitted Business or incurred
by such entity or the owner of such assets and outstanding on the date of such
acquisition.
Permitted Business means any business Holdings and its Restricted
Subsidiaries conducted 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, David P. Tomick,
Joe L. Finley, Welsh, Carson, Anderson & Stowe VIII, L.P., WCAS Information
Partners, L.P., WCAS Capital Partners III, L.P., their respective general
partners, employees of Welsh, Carson, Anderson & Stowe, CIBC WG Argosy Merchant
Fund 2, L.L.C., Co-Investment Merchant Fund 3, LLC, Caravelle Investment Fund
L.L.C., Tower Parent Corp., Whitney Equity Partners, L.P., J.H. Whitney III,
L.P., Whitney Strategic Partners III, L.P., J.H. Whitney Mezzanine Fund, 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 any of Holdings' or a Restricted Subsidiary's
Investment in:
1. Holdings, a Restricted Subsidiary, or a person which will, upon the
making of such Investment, become a Restricted Subsidiary;
2. 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, Holdings or a Restricted Subsidiary;
provided, however, that such person's primary business is a Permitted
Business;
3. Temporary Cash Investments;
4. receivables owing to Holdings or any Restricted Subsidiary, if created
or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms;
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provided, however, that such trade terms may include concessionary
trade terms which Holdings or any such Restricted Subsidiary deems
reasonable under the circumstances;
5. 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;
6. loans or advances to employees made in the ordinary course of
business, consistent with the past practices of Holdings or such
Restricted Subsidiary, but in any event not to exceed $2.0 million in
the aggregate outstanding at any one time;
7. stock, obligations, or securities, received in settlement of debts
created in the ordinary course of business and owing to Holdings or
any Restricted Subsidiary, or in satisfaction of judgments or pursuant
to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of a debtor;
8. 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";
9. Holdings' or any Restricted Subsidiary's capital stock, purchased,
redeemed or otherwise acquired or retired for value from members of
Holdings' management or employees, but in any event not to exceed $2.0
million in the aggregate in any twelve-month period;
10. other Investments in Permitted Businesses not to exceed, at any one
time outstanding, the sum of $10.0 million and 10% of Holdings'
Consolidated Tangible Assets;
11. any interest rate protection agreement or currency exchange protection
agreement;
12. any acquisition of assets, to the extent the consideration therefor
consists of Holdings' capital stock, other than Disqualified Stock;
13. prepaid expenses, negotiable instruments held for collection and
lease, utility and workers' compensation, performance and other
similar deposits;
14. 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; provided, however,
that the making of any Permitted Investment pursuant to this clause
(14) will not in any manner violate the covenant described under
"--Limitation on Sales of Assets and Subsidiary Stock";
15. Investments made out of the Net Cash Proceeds or Qualified Proceeds of
the issuance or sale, other than to a subsidiary of Holdings, of
Capital Stock of Holdings, other than Disqualified Stock, to the
extent that such Net Cash Proceeds or Qualified Proceeds have not been
applied to make a Restricted Payment or to effect other transactions
pursuant to the covenant "--Certain Covenants--Limitation on
Restricted Payments" or to the extent such Net Cash Proceeds or
Qualified Proceeds have not been used to Incur Indebtedness; and
16. Other Investments not to exceed, at any one time outstanding, $75.0
million.
Permitted Liens means, with respect to any person:
1. pledges or deposits by such person, under worker'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;
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2. 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 proceedings, 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;
3. Liens for property taxes not yet subject to penalties for non-payment,
or which are being contested in good faith by appropriate proceedings;
4. 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;
5. survey exceptions, 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;
6. Liens securing hedging obligations, so long as the related
Indebtedness is, and the indenture permits it to be, secured by a Lien
on the same property securing such hedging obligations;
7. leases and subleases of real property which do not interfere with
Holdings' or any of its Restricted Subsidiaries' ordinary conduct of
business and Liens securing the obligations, other than Indebtedness,
of Holdings or any of its Restricted Subsidiaries under any such
leases and subleases of real property;
8. Liens existing as of the date on which the notes are originally
issued, and Liens which the indentures created;
9. 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 Indebtedness secured by such Liens is Indebtedness which the
indentures otherwise permit to be incurred; and
b. such Liens shall not encumber any other of Holdings' or any of
its Restricted Subsidiaries' assets or property;
10. Liens on a Restricted Subsidiary's assets or property, existing at the
time such Restricted Subsidiary became a Holdings Subsidiary, and not
incurred as a result of, in connection with, or in anticipation of
such Restricted Subsidiary becoming a Holdings subsidiary; 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 Indebtedness secured by such Liens is Indebtedness which the
indentures otherwise permit to be incurred; and
c. such Liens do not extend to or cover any other property or assets
of Holdings or any of its Restricted Subsidiaries;
11. Liens securing Indebtedness outstanding under a Credit Facility and
any other Liens securing Indebtedness permitted under the indentures
to be incurred by a Restricted Subsidiary;
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12. Liens extending, renewing or replacing, in whole or in part, a Lien
the indentures permit; 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 the Lien secures may not exceed the Indebtedness
the existing Lien secured at the time;
13. Liens incurred in the ordinary course of business, by Holdings or any
Restricted Subsidiary of Holdings, with respect to obligations that do
not exceed $25.0 million at any one time outstanding, and that:
a. are not incurred in connection with the borrowing of money or the
obtaining of advances of credit, other than trade credit in the
ordinary course of business; and
b. do not, in the aggregate, materially detract from the value of
the property, or materially impair the use thereof in the
operation of business by Holdings or such Restricted Subsidiary;
14. Liens in favor of Holdings or a Restricted Subsidiary of Holdings;
15. any interest in or title of a lessor to any property subject to a
capital lease obligation the indentures permit to be incurred;
16. Liens on Unrestricted Subsidiaries' capital stock;
17. the Liens granted pursuant to the terms of the Security and
Subordination Agreement, as amended, modified or supplemented from
time to time, entered into pursuant to the terms of the Agreement and
Plan of Merger, dated as of February 10, 1999, among Holdings,
SpectraSite Communications Inc., SHI Merger Sub, Inc., Nextel and
certain of its subsidiaries;
18. Liens, rights of set-off or similar rights and remedies as to deposit
accounts or other funds maintained with a depository or other
financial institution;
19. Liens on property subject to capital leases to the extent the related
Capitalized Lease Obligation is permitted to be Incurred under the
"--Limitation on Indebtedness" and "--Limitation on Indebtedness and
Preferred Stock of Restricted Subsidiaries" covenants;
20. Liens on property of the Issuer or a Restricted Subsidiary at the time
the Issuer or Restricted Subsidiary acquired the property, including
any acquisition by means of a merger or consolidation with or into the
Issuer or any Restricted Subsidiary; provided, however, that such
Liens are not created, incurred or assumed in connection with, or in
contemplation of, such acquisition, provided, further, however, that
such Liens may not extend to any other property owned by the Issuer or
any Restricted Subsidiary; and
21. Liens on government securities that secure Indebtedness, to the extent
that such government securities are purchased with the proceeds of
such Indebtedness.
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.
Refinancing Indebtedness means Indebtedness that refinances any of
Holdings' or any Restricted Subsidiary's Indebtedness existing on the date of
the indentures, or incurred in compliance with the indentures, including any of
Holdings' Indebtedness that refinances any Restricted Subsidiary's
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Indebtedness, and any Restricted Subsidiary's Indebtedness that refinances
another Restricted Subsidiary's Indebtedness, including Indebtedness that
refinances Refinancing Indebtedness; provided, however, that:
1. the Refinancing Indebtedness has a Stated Maturity no earlier than the
earlier of the Stated Maturity of the notes and the Stated Maturity of
the Indebtedness being refinanced;
2. the Refinancing Indebtedness has an Average Life, at the time such
Refinancing Indebtedness is incurred, that is equal to or greater than
the lesser of the Average Life of the Indebtedness being refinanced and
the Average Life of the notes; and
3. 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, however, that Refinancing Indebtedness
shall not include:
a. any of a subsidiary's Indebtedness that refinances any of Holdings
Indebtedness; or
b. any of Holdings' or a subsidiary's Indebtedness that refinances an
Unrestricted Subsidiary's Indebtedness.
Restricted Payment with respect to any Person means:
1. 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 (a)
dividends or distributions payable solely in its capital stock, other
than Disqualified Stock, (b) dividends or distributions payable solely
to Holdings or a Restricted Subsidiary, and (c) pro rata dividends or
other distributions, made by a subsidiary that is not a wholly owned
subsidiary of Holdings, to minority stockholders, or owners of an
equivalent interest, in the case of a subsidiary that is an entity
other than a corporation;
2. the purchase, redemption or other acquisition or retirement for value
of any of Holdings' capital stock held by any person, or of any of a
Restricted Subsidiary's capital stock held by any person, other than
Holdings or a Restricted Subsidiary, other than the exercise by
Holdings of any option to convert or exchange any capital stock into
Indebtedness so long as such Indebtedness is permitted to be incurred
as of the date of such exercise under the indentures, and other than as
permitted by clause (9) of the definition of Permitted Investments;
3. 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
4. the making of any Investment in any person, other than a Permitted
Investment.
Restricted Subsidiary means any subsidiary of Holdings that is not an
Unrestricted Subsidiary.
Sale/Leaseback Transaction means an arrangement relating to property now
owned or hereafter acquired, whereby Holdings or a Restricted Subsidiary
transfers such property to a person, and Holdings or a Restricted Subsidiary
leases it from such person.
Secured Indebtedness means any of Holdings' Indebtedness secured by a Lien.
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Senior Indebtedness means:
1. any of Holdings' Indebtedness, whether outstanding on the Issue Date or
thereafter incurred; and
2. accrued and unpaid interest, including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating
to Holdings, to the extent post-filing interest is allowed in such
proceeding, in respect of:
a. Indebtedness for money Holdings borrowed; and
b. Indebtedness evidenced by notes, debentures, bonds or other
similar instruments which Holdings is responsible or liable to
make payment for,
unless, in the case of clauses (1) and (2) above, 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.
Senior Indebtedness shall not include:
- any obligation Holdings has to any subsidiary;
- any liability for federal, state, local or other taxes Holdings owed or
owes;
- any accounts payable or other liability to trade creditors arising in the
ordinary course of business, including guarantees thereof or instruments
evidencing such liabilities;
- any of Holdings' Indebtedness, and any accrued and unpaid interest in
respect thereof, which is subordinate or junior in any respect to any
other of Holdings' Indebtedness or other obligation; or
- that portion of any Indebtedness which, at the time of incurrence, is
incurred in violation of the indentures.
Significant Subsidiary means any Restricted Subsidiary that would be a
Significant Subsidiary of Holdings within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
Site Management Contract means any agreement pursuant to which Holdings, or
any of its Restricted Subsidiaries, has the right to substantially control Tower
Assets and the revenues derived from the rental or use thereof.
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 holder's option upon the happening of any contingency beyond
Holdings' control, unless such contingency has occurred.
Subordinated Obligation means any of Holdings' Indebtedness, 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.
Temporary Cash Investments means any of the following:
1. 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;
2. 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 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;
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3. repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above,
entered into with a bank, meeting the qualifications described in
clause (2) above;
4. investments in commercial paper, maturing not more than 270 days after
the date of acquisition, issued by a corporation, other than a Holdings
Affiliate, 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 of investment of at least
P-1 according to Moody's Investors Service, Inc. or at least A-1
according to Standard & Poor's Ratings Group; and
5. investments in securities with maturities of one year or less from the
date of acquisition, issued or fully guaranteed by any state,
commonwealth or territory of the United States 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.
The Trust Indenture Act means the Trust Indenture Act of 1939 (15 U.S.C.
sections 77aaa-77bbbb) as in effect on the date of the indentures.
Tower Asset Exchange means any transaction in which Holdings 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 Board of
Directors resolution), of the Tower Assets and cash or cash equivalents which
Holdings and its Restricted Subsidiaries received in such exchange, is at least
equal to the fair market value of the assets disposed in such exchange.
Tower Assets means 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 Holdings and its
Restricted Subsidiaries for such period that is directly attributable to site
rental revenue or license or management fees, paid to manage, lease or sublease
space on communication sites owned, leased or managed by Holdings (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 Holdings'
financial statements, such expenses shall be allocated to Holdings' site leasing
business in proportion to the percentage of Holdings' total revenues, for the
applicable period, that were site leasing revenues.
Unrestricted Subsidiary means:
1. any Holdings subsidiary that, at the time of determination, shall be
designated an Unrestricted Subsidiary by the Board of Directors in the
manner provided below; and
2. any subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Holdings subsidiary, including any
newly acquired or newly formed Holdings subsidiary, 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, Holdings
or any other Holdings Restricted Subsidiary, that is not a subsidiary of the
subsidiary to be so designated; provided, however, that either:
a. the subsidiary designated as an Unrestricted Subsidiary 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."
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The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary, as long as:
- immediately after giving effect to such designation no default shall have
occurred and be continuing; and
- such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if
such Indebtedness is permitted under the indentures.
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 of Directors
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 of the United States, 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 Holdings' 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.
BOOK-ENTRY; DELIVERY AND FORM
Registered notes initially will be represented by one or more notes in
registered, global form without interest coupons. The registered global notes
will be deposited upon issuance with the trustee as custodian for The Depository
Trust Company, also referred to as DTC, in New York, New York, and registered in
the name of DTC or its nominee, in each case for credit to an account of a
direct or indirect participant as described below.
Except as set forth below, the registered global notes may be transferred,
in whole but not in part, only to another nominee of DTC or to a successor of
DTC or its nominee. Beneficial interests in the registered global notes may not
be exchanged for registered new notes in certificated form except in the limited
circumstances described below. See "-- Exchange of Book-Entry Notes for
Certificated Notes." In addition, transfer of beneficial interests in the
registered global notes will be subject to the applicable rules and procedures
of DTC and its direct or indirect participants (including, if applicable, those
of Euroclear and Clearstream, Luxembourg), which may change from time to time.
DEPOSITORY PROCEDURES
DTC has advised SpectraSite that DTC is a limited-purpose trust company
created to hold securities for its participating organizations and to facilitate
the clearance and settlement of transactions in those securities between the
participants through electronic book-entry changes in accounts of the
participants. The participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations. Access
to DTC's system is also available to other entities such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly. Persons who are
not participants may beneficially own securities held by or on behalf of DTC
only through the participants or the indirect participants. The ownership
interest and transfer of ownership interest of each actual purchaser of each
security held by or on behalf of DTC are recorded on the records of the
participants and the indirect participants.
DTC has also advised SpectraSite that pursuant to procedures established by
it, (i) upon deposit of the registered global notes, DTC will credit the
accounts of participants designated by the initial purchasers with portions of
the principal amount of the registered global notes and (ii) ownership of such
interests in the registered global notes will be shown on, and the transfer of
ownership thereof will be effected only through, records maintained by DTC (with
respect to the participants) or by the participants
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and the indirect participants (with respect to other owners of beneficial
interests in the registered global notes).
Investors in the registered global notes may hold their interests therein
directly through DTC, if they are participants in such system, or indirectly
through organizations (including Euroclear and Clearstream, Luxembourg) which
are participants in such system. Investors in the Regulation S global note must
initially hold their interests therein through Euroclear or Clearstream,
Luxembourg, if they are accountholders in such systems, or indirectly through
organizations which are accountholders in such systems. After the expiration of
the Restricted Period (but not earlier), investors may also hold interests in
the Regulation S global note through organizations other than Euroclear and
Clearstream, Luxembourg that are participants in the DTC system. Euroclear and
Clearstream, Luxembourg will hold interests in the Regulation S global note on
behalf of their participants through their respective depositories, which in
turn will hold such interests in the Regulation S global note customers'
securities accounts in their respective names on the books of DTC. The Chase
Manhattan Bank, Brussels office, will initially act as depository for Euroclear,
and Citibank, N.A., will initially act as depository for Clearstream,
Luxembourg. All interests in a registered global note, including those held
through Euroclear or Clearstream, Luxembourg, may be subject to the procedures
and requirements of DTC. Those interests held through Euroclear or Clearstream,
Luxembourg may also be subject to the procedures and requirements of such
system.
The laws of some states require that certain persons take physical delivery
in definitive form of securities that they own. Consequently, the ability to
transfer beneficial interests in a registered global note to such persons may be
limited to that extent. Because DTC can act only on behalf of the participants,
which in turn act on behalf of the indirect participants and certain banks, the
ability of a person having beneficial interests in a registered global note to
pledge such interests to persons or entities that do not participate in the DTC
system, or otherwise take actions in respect of such interests, may be affected
by the lack of a physical certificate evidencing such interests.
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE REGISTERED GLOBAL
NOTES WILL NOT HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL
DELIVERY OF NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED
OWNERS OR HOLDERS THEREOF UNDER THE INDENTURES FOR ANY PURPOSE.
Payments in respect of the principal of (and premium, if any) and interest
on a registered global note registered in the name of DTC or its nominee will be
payable to DTC or its nominee in its capacity as the registered holder under the
indentures. Under the terms of the indentures, Holdings and United States Trust
Company of New York, as trustee, will treat the persons in whose names the
notes, including the registered global notes, are registered as the owners
thereof for the purpose of receiving such payments and for any and all other
purposes whatsoever. Consequently, none of Holdings, the trustee, nor any agent
of Holdings or the trustee has or will have any responsibility or liability for
(i) any aspect or accuracy of DTC's records or any participant's or indirect
participant's records relating to the beneficial ownership or (ii) any other
matter relating to the actions and practices of DTC or any of the participants
or the indirect participants.
DTC has advised SpectraSite that its current practice, upon receipt of any
payment in respect of securities such as the new notes (including principal and
interest), is to credit the accounts of the relevant participants with the
payment on the payment date, in amounts proportionate to their respective
holdings in principal amount of beneficial interests in the relevant security as
shown on the records of DTC. Payments by the participants and the indirect
participants to the beneficial owners of new notes will be governed by standing
instructions and customary practices and will not be the responsibility of DTC,
the trustee or SpectraSite. Neither SpectraSite nor the trustee will be liable
for any delay by DTC or any of the participants in identifying the beneficial
owners of the new notes, and SpectraSite and the trustee may conclusively rely
on and will be protected in relying on instructions from DTC or its nominee as
the registered owner of the registered global notes for all purposes.
Except for trades involving only Euroclear and Clearstream, Luxembourg
participants, interests in the registered global notes will trade in DTC's
same-day funds settlement system and secondary market
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trading activity in such interests will therefore settle in immediately
available funds, subject in all cases to the rules and procedures of DTC and the
participants.
Transfers between participants in DTC will be effected in accordance with
DTC's procedures and will be settled in same-day funds. Transfers between
account holders in Euroclear and Clearstream, Luxembourg will be effected in the
ordinary way in accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the new
notes described herein, cross-market transfers between the account holders in
DTC, on the one hand, and directly or indirectly through Euroclear or
Clearstream, Luxembourg account holders, on the other hand, will be effected
through DTC in accordance with DTC's rules on behalf of Euroclear or
Clearstream, Luxembourg, as the case may be, by its respective depository;
however, such cross-market transactions will require delivery of instructions to
Euroclear or Clearstream, Luxembourg, as the case may be, by the counterparty in
such system in accordance with the rules and procedures and within the
established deadlines (Brussels time) of such system. Euroclear or Clearstream,
Luxembourg, as the case may be, will, if the transaction meets its settlement
requirements, deliver instructions to its respective depository to take action
to effect final settlement on its behalf by delivering or receiving interests in
the relevant registered global note in DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
DTC. Euroclear and Clearstream, Luxembourg account holders may not deliver
instructions directly to the depositories for Euroclear or Clearstream,
Luxembourg.
Because of time zone differences, the securities account of a Euroclear or
Clearstream, Luxembourg account holder purchasing an interest in a registered
global note from an account holder in DTC will be credited, and any such
crediting will be reported to the relevant Euroclear or Clearstream, Luxembourg
participant, during the securities settlement processing day (which must be a
business day for Euroclear or Clearstream, Luxembourg) immediately following the
settlement date of DTC. Cash received in Euroclear or Clearstream, Luxembourg as
a result of sales of interests in a registered global note by or through a
Euroclear or Clearstream, Luxembourg account holder to a participant in DTC will
be received with value on the settlement date of DTC but will be available in
the relevant Euroclear or Clearstream, Luxembourg cash account only as of the
business day for Euroclear or Clearstream, Luxembourg following DTC's settlement
date.
DTC has advised SpectraSite that it will take any action permitted to be
taken by a holder of new notes only at the direction of one or more participants
to whose account with DTC interests in the registered global notes are credited
and only in respect of such portion of the aggregate principal amount at
maturity of the new notes as to which such participant or participants has or
have given such direction. However, if any of the events described under
"-- Exchange of Book Entry Notes for Certificated Notes" occurs, DTC reserves
the right to exchange the registered global notes for registered new notes in
certificated form and to distribute such registered new notes to its
participants.
The information in the section concerning DTC, Euroclear and Clearstream,
Luxembourg and their book-entry systems has been obtained from sources that
SpectraSite believes to be reliable, but SpectraSite takes no responsibility for
the accuracy thereof.
Although DTC, Euroclear and Clearstream, Luxembourg have agreed to the
foregoing procedures to facilitate transfers of interests in the registered
global note among account holders in DTC and account holders of Euroclear and
Clearstream, Luxembourg, they are under no obligation to perform or to continue
to perform such procedures, and such procedures may be discontinued at any time.
None of SpectraSite or the trustee, nor any agent of SpectraSite or the trustee
will have any responsibility for the performance by DTC, Euroclear or
Clearstream, Luxembourg or their respective participants, indirect participants
or account holders of their respective obligations under the rules and
procedures governing their operations.
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EXCHANGE OF BOOK-ENTRY NOTES FOR CERTIFICATED NOTES
The registered global notes are exchangeable for definitive notes in
registered certificated form if (i) DTC (x) notifies SpectraSite that it is
unwilling or unable to continue as depository for the registered global notes
and SpectraSite thereupon fails to appoint a successor depository or (y) has
ceased to be a clearing agency registered under the Exchange Act, (ii)
SpectraSite, at its option, notifies the trustee in writing that it elects to
cause the issuance of the registered new notes in certificated form or (iii)
there shall have occurred and be continuing a default or an event of default
with respect to the registered new notes. In all cases, registered certificated
new notes delivered in exchange for any registered global note or beneficial
interests therein will be registered in the names, and issued in any approved
denominations, requested by or on behalf of DTC (in accordance with its
customary procedures).
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CERTAIN UNITED STATES 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 discount notes and the cash 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, 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 who purchased the notes for cash as
part of this offering and hold them as capital assets within the meaning of
Section 1221 of the Internal Revenue Code. We will treat the notes as
indebtedness for United States federal income tax purposes, and the following
discussion assumes that such treatment will be respected.
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, U.S. HOLDERS (AS DEFINED
BELOW) WHOSE FUNCTIONAL CURRENCY IS NOT THE U.S. DOLLAR AND PERSONS WHO WILL
HOLD THE NOTES AS PART OF A POSITION IN A STRADDLE OR AS PART OF A CONSTRUCTIVE
SALE OR A HEDGING, CONVERSION OR OTHER INTEGRATED TRANSACTION, OR ADDRESS
ASPECTS OF UNITED STATES 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. WE URGE YOU TO
CONSULT YOUR OWN TAX ADVISOR REGARDING THE UNITED STATES FEDERAL TAX
CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF THE NOTES, INCLUDING YOUR
STATUS AS A U.S. HOLDER OR A NON-U. S. HOLDER, AS WELL AS ANY TAX CONSEQUENCES
THAT MAY ARISE UNDER THE LAWS OF ANY STATE, MUNICIPALITY, FOREIGN COUNTRY OR
OTHER TAXING JURISDICTION.
A U.S. Holder means a beneficial owner of a note that, for United States
federal income tax purposes, is:
- a citizen or individual resident, as defined in Section 7701(b) of the
Internal Revenue 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, Treasury regulations provide otherwise);
- 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 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 U.S. Holders prior to such date, may elect to
continue to be treated as U.S. Holders. A Non-U.S. Holder means a beneficial
owner of a note that is not a U.S. Holder.
EFFECT OF EXCHANGE OF OUTSTANDING NOTES FOR REGISTERED NOTES
We believe that the exchange of outstanding notes for registered notes
under the registered exchange offer will not be treated as an exchange for
United States federal income tax purposes because the registered notes will not
be considered to differ materially in kind or extent from the outstanding notes.
Rather, the registered notes received by a holder will be treated as a
continuation of the outstanding notes
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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 outstanding notes
for registered notes under the exchange offer, the holding period of the
registered notes will include the holding period of the outstanding notes, and
the basis of the registered notes will equal the basis of the outstanding notes
immediately before the exchange.
U.S. HOLDERS
Stated Interest. Payments of stated interest on the cash notes will
generally be taxable to a U.S. Holder as ordinary interest income at the time
such payments are received or accrued, in accordance with such holder's regular
method of tax accounting. Payments of stated interest on the discount notes will
not be separately included in income, but rather will be treated first as
payments of previously accrued and unpaid original issue discount and then as
payments of principal, as described below under "-- U.S. Holders -- Original
Issued Discount."
Original Issue Discount. Because the discount notes were issued at a
discount from their stated redemption price at maturity, they have original
issue discount for United States federal income tax purposes. The amount of
original issue discount generally equals the excess of a discount note's stated
redemption price at maturity over its issue price. A discount note's issue price
is the first price at which a substantial amount of the discount notes was sold,
excluding sales to bond houses, brokers or similar persons or organizations
acting in the capacity of underwriters or wholesalers. A discount note's stated
redemption price at maturity is the sum of all cash payments to be made on such
discount 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 discount notes
prior to September 15, 2005, none of the interest payments on the discount notes
constitute qualified stated interest; and, accordingly, each discount note bears
original issue discount in an amount equal to the excess of the sum of its
principal amount and all stated interest payments, over its issue price.
A U.S. Holder of a discount note must include original issue discount in
gross income (as ordinary interest income) periodically over the term of the
discount note before receipt of the cash or other payment attributable to such
income, regardless of such holder's method of tax accounting. The amount to be
included for any taxable year is the sum of the daily portions of original issue
discount with respect to the discount note for each day during the taxable year
or portion of a taxable year during which such holder holds such discount 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 such discount
note's adjusted issue price at the beginning of the accrual period multiplied by
its yield to maturity. For purposes of computing original issue discount, we use
six-month accrual periods that end on the days in the calendar year
corresponding to the maturity date of the discount notes and the date six months
prior to such maturity date, with the exception of an initial short accrual
period. A U.S. Holder is permitted to use different accrual periods; provided,
however, 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 discount note at the beginning of
any accrual period is its issue price increased by the aggregate amount of
original issue discount previously includible in the gross income of the holder
(disregarding any reduction on account of any acquisition premium, described
below) and decreased by any payments previously made on the discount note. A
discount note's 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
thereon, produces an amount equal to the issue price of such discount note.
Under these rules, U.S. Holders must include in gross income increasingly
greater amounts of original issue discount in each successive accrual period.
Payments of stated interest on a discount note are not separately included in
income, but rather are treated first as payments of previously accrued and
unpaid original issue discount. Consequently, such payments reduce a U.S.
Holder's basis in such discount note, as described below under "-- U.S.
Holders -- Sale, Exchange or Redemption of the Notes."
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We do not intend to treat the possibility of:
- an optional redemption, as described under "Description of the
Notes -- Optional Redemption;"
- a repurchase pursuant to a Change in Control, as described under
"Description of the Notes -- Change of Control;" and
- the additional interest that will accrue on the notes as a result of our
failure to cause the notes to be registered under the Securities Act, as
described under "Description of the Notes -- Registration Rights,"
as affecting the determination of the yield to maturity of the discount notes,
or as creating original issue discount with respect to the cash notes, or as
giving rise to any additional accrual of original issue discount or recognition
of ordinary income upon the redemption, sale or exchange of a note. In the event
that the interest rate on the notes is increased, then such increased interest
may be treated as increasing the amount of (or, in the case of the cash notes,
creating) original issue discount on the notes.
Acquisition Premium. A U.S. Holder that purchases a discount note for an
amount that is greater than its adjusted issue price as of the purchase date
will be considered to have purchased such discount note at an acquisition
premium. The amount of original issue discount that such holder must include in
its gross income with respect to such discount note for any taxable year is
generally reduced by the portion of such acquisition premium properly allocable
to such year. The information that we report to the record holders of the
discount notes on an annual basis will not account for an offset against
original issue discount for any portion of any acquisition premium. Accordingly,
each U.S. Holder should consult its tax advisor as to the determination of the
acquisition premium amount and the resulting adjustments to the amount of
reportable original issue discount.
Acquisition Bond Premium. A U.S. Holder that purchases a cash note for an
amount in excess of its principal amount will be considered to have purchased
such note at a premium and may elect to amortize such premium, using a constant
yield method, over the remaining term of such 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 U.S. Holder's interest income from such note. Bond
premium on a note held by a U.S. Holder that does not make such an election will
decrease the gain or increase the loss otherwise recognized on disposition of
such 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 U.S. 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.
Market Discount. If a U.S. Holder purchases either a discount note for an
amount that is less than its revised issue price as of the purchase date or a
cash note for an amount that is less than its stated redemption price at
maturity, the amount of the difference generally will be treated as market
discount, unless such difference is less than a specified de minimis amount. The
Internal Revenue Code provides that the revised issue price of a discount note
equals its issue price plus the amount of original issue discount includible 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 such discount note.
The U.S. Holder will be required to treat any prior payment on, and any
gain recognized on the sale, exchange, redemption, retirement or other
disposition of, such a discount note or such a cash note as ordinary income to
the extent of any accrued market discount that has not previously been included
in income and treated as having accrued on such note at the time of such payment
or disposition. If a U.S. Holder disposes of such note in a nontaxable
transaction (other than as provided in Sections 1276(c) and (d) of the Internal
Revenue Code), such holder must include as ordinary income the accrued market
discount as if such holder had disposed of such note in a taxable transaction at
the note's fair market value. In addition, the U.S. Holder may be required to
defer, until the maturity date of such a note or its earlier disposition
(including a nontaxable transaction other than as provided in Sections 1276(c)
and
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(d)), 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 such a note, unless the
U.S. Holder elects to accrue market discount on a constant interest method. A
U.S. Holder 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 Internal Revenue Service. If the
U.S. Holder 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 continued to purchase or carry such debt instruments, would not
apply.
Election to Treat All Interest as Original Issue Discount. A U.S. Holder
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, original issue discount, market
discount, de minimis original issue discount, 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, U.S. Holders should consult their tax advisors as to
whether they should make this election.
The AHYDO Rule. The discount notes constitute applicable high yield
discount obligations (AHYDOs). Accordingly, pursuant to Sections 163(e) and
163(i) of the Internal Revenue Code, we cannot deduct original issue discount
that accrues with respect thereto until amounts attributable to such original
issue discount are paid in cash.
Furthermore, because the yield to maturity of the discount notes exceeds
the sum of the relevant applicable federal rate for the month in which the they
are issued plus 6 percentage points (the excess yield), we are permanently
prohibited from deducting a portion of the original issue discount accruing on
the discount notes. Instead, this disqualified portion is characterized as a
nondeductible dividend paid by us and is treated as a dividend distribution, to
the extent of available current and accumulated earnings and profits, solely for
purposes of the dividend received deduction of Sections 243, 246 and 246A of the
Internal Revenue Code with respect to holders that are U.S. corporations. For
March 2000, the long-term applicable federal rate is 6.64%, based on semi-annual
compounding. The disqualified portion for any accrual period will equal the
product of:
- a percentage determined by dividing the excess yield by the yield to
maturity; and
- the original issue discount for the accrual period at issue.
Subject to otherwise applicable limitations, a corporate holder is entitled to a
dividends received deduction with respect to the disqualified portion of the
accrued original issue discount if we have sufficient current or accumulated
earnings and profits. To the extent that our earnings and profits are
insufficient, any portion of the original issue discount that otherwise would
have been recharacterized as a dividend for purposes of the dividends received
deduction will continue to be treated as ordinary original issue discount income
in accordance with the rules described above under "--Original Issue Discount."
Treatment of the discount notes as AHYDOs does not disqualify interest or
original issue discount accruing with respect thereto from the portfolio
interest exception described below under "Certain United States Federal Tax
Considerations--Non-U.S. Holders--Interest;" provided, however, that all
applicable requirements for the exception are otherwise satisfied.
Sale, Exchange or Redemption of the Notes. Generally, a sale, exchange,
redemption or other disposition of the discount notes or the cash notes will
result in taxable gain or loss equal to the difference between the amount of
cash plus the fair market value of other property received (other than amounts
attributable to accrued and unpaid interest, which will be taxable as such) and
the U.S. Holder's adjusted
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tax basis in such notes. A U.S. 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 such note to such holder and will be increased by:
- any amounts included in income as original issue discount by such
holder, with respect to a discount note only; and
- any market discount previously included in income by such holder,
and decreased by:
- any principal payments, and with respect to a discount note only, stated
interest payments, received by such holder; and
- 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 U.S. Holder for more than one year, otherwise
such gain or loss will be short-term.
U.S. Holders that are corporations generally will be taxed on net capital
gains at a maximum rate of 35%. In contrast, U.S. Holders that are individuals
generally will be taxed on net capital gains at a maximum rate of 39.6% for
property held for 12 months or less, and 20% for property held for more than 12
months. Special rules, and generally lower maximum rates, apply to individuals
in lower tax brackets and to individuals who have held, for more than 5 years,
capital assets acquired or deemed to have been acquired after December 31, 2000.
Any capital losses realized by a U.S. Holder that is a corporation generally may
be used only to offset capital gains. Any capital losses realized by a U.S.
Holder that is an individual generally may be used only to offset capital gains
plus $3,000 of other income per year.
NON-U.S. HOLDERS
Interest. Under current United States federal income tax law, and subject
to the discussion of backup withholding below, interest, including original
issue discount, paid on the notes to a Non-U.S. Holder will not be subject to
the normal 30% United States federal withholding tax if:
- the interest is effectively connected with the conduct of a trade or
business in the United States by the Non-U.S. Holder and the Non-U.S.
Holder timely furnishes to us or our paying agent two duly executed
copies of Internal Revenue Service Form W-8ECI, or any successor form,
executed under penalties of perjury; or
- all of the following conditions of the portfolio interest exception are
met:
(A) the Non-U.S. Holder does not, actually or constructively, own 10%
or more of the total combined voting power of all classes of our
stock entitled to vote,
(B) the Non-U.S. Holder is not a controlled foreign corporation that
is related, directly or indirectly, to us through stock ownership,
(C) the Non-U.S. Holder is not a bank receiving interest, including
original issue discount, pursuant to a loan agreement entered into
in the ordinary course of its trade or business, and
(D) either (1) the Non-U.S. Holder certifies to us or our paying
agent, under penalties of perjury, that such holder is a Non-U.S.
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 and holds the notes in such capacity certifies to us or
our paying agent, under penalties of perjury, that such statement
has been received from the beneficial owner of the notes by such
organization, or by any other financial institution between such
organization and the beneficial owner, and furnishes us or our
paying agent with a copy thereof. The foregoing certification may
be provided by the Non-U.S. Holder on Internal Revenue Service
Form W-8BEN, or
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any successor form, executed under penalties of perjury. Such
certificate is effective with respect to payments of interest,
including original issue discount, made after the issuance of the
certificate in the calendar year of its issuance and the two
immediately succeeding calendar years.
In the event that the interest, including original issue discount, paid on
the notes is effectively connected with the conduct of a trade or business
within the United States of the Non-U.S. Holder, the Non-U.S. 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 U.S.
Holders in essentially the same manner as if the notes were held by a U.S.
Holder, as discussed above. In the case of a Non-U.S. 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-U.S. Holder is a qualified resident of
the treaty country.
If the interest on the notes is not effectively connected with the conduct
of a trade or business within the United States and does not qualify for the
portfolio interest exception described above, 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 Internal Revenue Service Form
W-8BEN, or any successor form, executed under penalties of perjury, to us or our
paying agent certifying eligibility for treaty benefits.
On October 14, 1997, final regulations were published that govern
information reporting and certification procedures regarding withholding and
backup withholding on certain amounts paid to Non-U.S. Holders. The 1997
regulations are effective for payments made after December 31, 2000, regardless
of the issue date of the instrument with respect to which such payments are
made, subject to certain transition rules. The 1997 regulations provide
documentation procedures designed to simplify compliance by withholding agents.
They generally do not alter the treatment of Non-U.S. Holders, described above,
but change certification procedures and forms and clarify and modify payor
reliance standards. For purposes of the certification requirements, the 1997
regulations generally treat as the beneficial owners of payments on the notes
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 federal income 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 Internal Revenue Service. In contrast, a payment to a United States
partnership is treated for these purposes as payment to a U.S. Holder, even if
the partnership has one or more foreign partners. 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
regulations. We urge you to consult your own tax advisor concerning the tax
consequences of your proposed investment in light of the 1997 regulations.
Gain on Sale or Other Disposition. A Non-U.S. Holder generally will 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-U.S. Holder or of a
partnership, trust or estate in which such Non-U.S. Holder is a partner
or beneficiary; or
- the Non-U.S. Holder is an individual that:
(A) is present in the United States for 183 days or more in the taxable
year of the sale or other disposition, and
(B) either has a tax home in the United States, as specially defined
for purposes of the United States federal income tax, or maintains
an office or other fixed place of business in the
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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.
Non-U.S. Holders who are individuals 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.
Gains realized by a Non-U.S. Holder that are effectively connected with the
conduct of a trade or business within the United States of the Non-U.S. Holder
generally will be taxed on a net income basis at the graduated rates that are
applicable to U.S. Holders, as described above, unless exempt by an applicable
income tax treaty. In the case of a Non-U.S. 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-U.S. Holder is a qualified resident of the treaty country.
Under the 1997 regulations, described above in "--Non-U.S.
Holders--Interest," withholding of United States federal income tax may apply to
payments on a taxable sale or other disposition of the notes by a Non-U.S.
Holder who does not provide appropriate certification to the withholding agent
with respect to such transaction.
Federal Estate and Gift Taxes. Notes 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, however, that any interest thereon
would have been eligible for the portfolio interest exception described above in
"--Non-U.S. 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 the 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 paid to, and to the proceeds of sales or other
dispositions of the notes before maturity by, certain U.S. Holders. In addition,
a 31% backup withholding tax applies to a non-corporate U.S. Holder if such
person:
(i) fails to furnish such person's taxpayer identification number, which,
for an individual, is his or her Social Security Number, to the payor
in the manner required;
(ii) furnishes an incorrect taxpayer identification number, and the payor
is so notified by the Internal Revenue Service;
(iii) is notified by the Internal Revenue Service that such person has
failed properly to report payments of interest or dividends; or
(iv) in certain circumstances, fails to certify, under penalties of
perjury, that such person has furnished a correct taxpayer
identification number and has not been notified by the Internal
Revenue Service that such person is subject to backup withholding for
failure properly to report interest or dividend payments.
Backup withholding does not apply to payments made to certain exempt U.S.
Holders, such as corporations and tax-exempt organizations.
In the case of a Non-U.S. Holder, under current United States federal
income tax law, backup withholding does not apply to payments of interest,
including original issue discount, with respect to the notes, or to payments of
proceeds on the sale or other disposition of the notes, if such holder has
provided
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to us or our paying agent the certification described in clause (ii)(D) of
"--Non-U.S. Holders--Interest" or has otherwise established an exemption.
We must annually report to the Internal Revenue Service and to each
Non-U.S. Holder any interest, including original issue discount, that is subject
to withholding or that is exempt from withholding. Copies of these information
returns may also be made available to the tax authorities of the country in
which the Non-U.S. Holder resides.
Under current United States federal income tax law, neither backup
withholding nor information reporting generally applies to payments of proceeds
on the sale or other disposition of the notes to or through a foreign office of
a foreign broker that is not a U.S. related person. For this purpose, a U.S.
related person means a controlled foreign corporation for United States federal
income tax purposes or a foreign person 50% or more of whose gross income is
effectively connected with the conduct of a trade or business within the United
States for a specified three-year period.
If payments of proceeds on the sale or other disposition of the notes were
made to or through the foreign office of a broker that is a United States
person, as defined in Section 7701(a)(30) of the Internal Revenue Code, or a
U.S. related person, such broker may be subject to certain information
reporting, but not backup withholding, requirements with respect to such
payments, unless such 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 broker is required to report if such person
has actual knowledge that the payee is a United States person.
Payments of proceeds on the sale or other disposition of the notes to or
through the United States office of a U.S. or foreign 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; provided, however, that the broker does not have
actual knowledge that the payee is a United States person or that the conditions
of the exemption are, in fact, not satisfied.
The 1997 regulations, described above in "--Non-U.S. Holders--Interest,"
modify certain of the certification requirements for backup withholding and
expand the group of U.S. related persons. It is possible that we or our paying
agent may request new withholding exemption forms from holders of the notes in
order to qualify for continued exemption from backup withholding when the 1997
regulations become effective.
Backup withholding tax is not an additional tax. Rather, any amounts
withheld from a payment to a holder of the notes under the backup withholding
rules are allowed as a refund or a credit against such holder's United States
federal income tax; provided, however, that the required information is
furnished to the Internal Revenue Service.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives registered notes for its own account
through the exchange offer, where its outstanding 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 such registered notes. This prospectus, as it may be amended
or supplemented from time to time, may be used by a broker-dealer in connection
with resales of registered notes received in exchange for outstanding notes
where such outstanding notes were acquired as a result of market making or other
trading activities. Until , 2000, 90 days after the commencement of the
exchange offer, all dealers effecting transactions in the registered notes may
be required to deliver a prospectus.
SpectraSite will not receive any proceeds from any sales of the registered
notes by participating broker-dealers. Registered notes received by
participating broker-dealers for their own account through 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 registered 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 registered 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
for the exchange offer 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 outstanding notes which were acquired as a result of
market making activities for registered notes have sold all registered notes
held by them, we 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. Holdings has agreed to pay all
expenses incident to the exchange offer. SpectraSite will indemnify the holders
of the registered notes, including any broker-dealers, against certain
liabilities, including liabilities under the Securities Act.
The registered notes will not be listed on any stock exchange. The notes
are designated for trading in The Portal Market.
125
<PAGE> 129
LEGAL MATTERS
Dow, Lohnes & Albertson, PLLC, Washington, D.C., will pass upon the
validity of the registered 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 years ended December 31, 1998 and 1999 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 this registration statement, 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.
Westower's consolidated financial statements as of September 30, 1998 and
for the seven months then ended and Summit's financial statements as of
September 30, 1998 and for the nine months then ended have been included in this
registration statement in reliance on the reports of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
Westower's consolidated financial statements as of February 28, 1997 and
February 28, 1998 and for the three years ended February 28, 1998 and Cord's
financial statements as of June 30, 1998 and for the two years ended June 30,
1998 have been included in this prospectus in reliance on the report of Moss
Adams LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
The financial statements of MJA Communications Corp. as of December 31,
1996 and December 31, 1997 and for the three years ended December 31, 1997, have
been consolidated with those of Westower in this prospectus in reliance on the
report of Lamn, Krielow, Dytrych & Darling, independent accountants, given on
the authority of said firm as experts in auditing and accounting.
The financial statements of Summit Communications LLC as of December 31,
1997 and for the period from inception, May 24, 1997, to December 31, 1997 have
been included in this prospectus in reliance on the report of Shearer, Taylor &
Co., P.A., independent accountants, given on the authority of said firm as
experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
Holdings filed a registration statement on Form S-4 with the SEC covering
the registered notes, and this prospectus is part of our registration statement.
For further information on SpectraSite 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.
Holdings files reports with the SEC as the Exchange Act requires. In
addition, the indentures governing the notes require 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.
126
<PAGE> 130
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
Report of Independent Auditors.............................. F-3
Consolidated Balance Sheets as of December 31, 1998 and
December 31, 1999......................................... F-4
Consolidated Statements of Operations for the period from
inception (April 25, 1997) to December 31, 1997 and for
the years ended December 31, 1998 and 1999................ F-5
Consolidated Statements of Redeemable Convertible Preferred
Stock and Shareholders' Equity (Deficiency)............... F-6
Consolidated Statements of Cash Flows for the period from
inception (April 25, 1997) to December 31, 1997 and for
the years ended December 31, 1998 and 1999................ F-7
Notes to Consolidated Financial Statements.................. F-8
TELESITE SERVICES, LLC
Report of Independent Auditors.............................. F-26
Consolidated Balance Sheet as of December 31, 1996.......... F-27
Consolidated Statements of Operations for the year ended
December 31, 1996 and for the period from January 1, 1997
through May 12, 1997...................................... F-28
Consolidated Statements of Members' Equity.................. F-29
Consolidated Statements of Cash Flows for the year ended
December 31, 1996 and for the period from January 1, 1997
through May 12, 1997...................................... F-30
Notes to Consolidated Financial Statements.................. F-31
WESTOWER CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets at September 30, 1998
and June 30, 1999 (unaudited)............................. F-35
Unaudited Condensed Consolidated Statements of Operations
for the three and nine months ended June 30, 1999 and
1998...................................................... F-36
Unaudited Condensed Consolidated Statements of Stockholders'
Equity for the nine months ended June 30, 1999............ F-37
Unaudited Condensed Consolidated Statements of Cash Flows
for the nine months ended June 30, 1999 and 1998.......... F-38
Notes to Unaudited Condensed Consolidated Financial
Statements................................................ F-39
Reports of Independent Accountants.......................... F-46
Consolidated Balance Sheets as of February 28, 1997 and 1998
and September 30, 1998.................................... F-49
Consolidated Statements of Income for the years ended
February 29, 1996, February 28, 1997 and 1998 and for the
seven months ended September 30, 1997 (unaudited) and
1998...................................................... F-50
Consolidated Statements of Stockholders' Equity for the
years ended February 29, 1996, February 28, 1997 and 1998
and for the seven months ended September 30, 1998......... F-51
Consolidated Statements of Cash Flows for the years ended
February 29, 1996, February 28, 1997 and 1998 and for the
seven months ended September 30, 1997 (unaudited) and
1998...................................................... F-52
Notes to Consolidated Financial Statements.................. F-53
CORD COMMUNICATIONS, INC.
Report of Independent Auditors.............................. F-74
Balance Sheets as of June 30, 1998 and 1997................. F-75
Statements of Operations for the years ended June 30, 1998
and 1997.................................................. F-76
</TABLE>
F-1
<PAGE> 131
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Statement of Changes in Stockholders' Equity (Deficit) for
the years ended June 30, 1998 and 1997.................... F-77
Statements of Cash Flows for the years ended June 30, 1998
and 1997.................................................. F-78
Notes to Financial Statements............................... F-79
SUMMIT COMMUNICATIONS, LLC
Report of Independent Accountants........................... F-87
Balance Sheets as of December 31, 1997 and September 30,
1998...................................................... F-89
Statements of Income for the period from May 24, 1997
(Inception) to December 31, 1997 and for the nine months
ended September 30, 1998.................................. F-90
Statement of Members' Equity for the period from May 24,
1997 (Inception) to December 31, 1997 and for the nine
months ended September 30, 1998........................... F-91
Statements of Cash Flows for the period from May 24, 1997
(Inception) to December 31, 1997 and for the nine months
ended September 30, 1998.................................. F-92
Notes to Financial Statements............................... F-93
</TABLE>
F-2
<PAGE> 132
REPORT OF INDEPENDENT AUDITORS
Board of Directors
SpectraSite Holdings, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of SpectraSite
Holdings, Inc. and subsidiaries as of December 31, 1998 and 1999 and the related
consolidated statements of operations, redeemable convertible preferred stock
and shareholders' equity (deficiency) and cash flows for the years ended
December 31, 1998 and 1999 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 auditing standards generally
accepted in the United States. 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 subsidiaries at December 31, 1998 and 1999 and the
consolidated results of its operations and its cash flows for the years ended
December 31, 1998 and 1999 and for the period from April 25, 1997 (inception) to
December 31, 1997 in conformity with accounting principles generally accepted in
the United States.
/s/ ERNST & YOUNG LLP
February 14, 2000
Raleigh, North Carolina
F-3
<PAGE> 133
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
---------------------
1998 1999
-------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 99,548 $ 37,778
Short-term investments.................................... 15,414 --
Accounts receivable, net of allowance of $0 and $1,530.... 3,353 31,785
Costs and estimated earnings in excess of billings........ -- 11,545
Inventories............................................... -- 4,083
Prepaid expenses and other................................ 253 4,353
-------- ----------
Total current assets........................................ 118,568 89,544
Property and equipment, net................................. 28,469 763,757
Goodwill and other intangible assets, net................... 12,757 307,197
Other assets................................................ 2,152 59,455
-------- ----------
Total assets................................................ $161,946 $1,219,953
======== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Accounts payable.......................................... $ 1,635 $ 21,230
Accrued and other expenses................................ 809 16,942
Billings in excess of costs and estimated earnings........ -- 5,247
-------- ----------
Total current liabilities................................... 2,444 43,419
Long-term debt.............................................. -- 202,527
Other long-term liabilities................................. 224 --
Senior discount notes....................................... 132,689 516,251
-------- ----------
Total liabilities........................................... 135,357 762,197
-------- ----------
Series A redeemable convertible preferred stock, $0.001 par,
3,462,830 shares authorized, and 3,462,830 outstanding,
stated at liquidation value............................... 11,300 --
-------- ----------
Series B redeemable convertible preferred stock, $0.001 par,
7,000,000 shares authorized, and 7,000,000 outstanding,
stated at liquidation value............................... 29,356 --
-------- ----------
Shareholders' equity (deficiency):
Series A convertible preferred stock, $0.001 par,
3,462,830 shares authorized and outstanding, stated at
liquidation value...................................... -- 10,000
Series B convertible preferred stock, $0.001 par,
7,000,000 shares authorized and outstanding, stated at
liquidation value...................................... -- 28,000
Series C convertible preferred stock, $0.001 par,
60,286,795 shares authorized and outstanding, stated at
liquidation value...................................... -- 301,494
Common stock, $0.001 par, 20,000,000 and 300,000,000
authorized, respectively, 956,753 and 20,191,604 issued
and outstanding, respectively.......................... 1 20
Additional paid-in-capital................................ -- 230,546
Accumulated other comprehensive income.................... -- 192
Accumulated deficit....................................... (14,068) (112,496)
-------- ----------
Total shareholders' equity (deficiency)..................... (14,067) 457,756
-------- ----------
Total liabilities, redeemable preferred stock and
shareholders' equity (deficiency)......................... $161,946 $1,219,953
======== ==========
</TABLE>
F-4
<PAGE> 134
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION YEAR YEAR
(APRIL 25, 1997) TO ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1998 1999
------------------- ------------ ------------
<S> <C> <C> <C>
Revenues:
Site leasing............................... $ -- $ 656 $ 46,515
Network services........................... 5,002 8,142 53,570
------- -------- --------
Total revenues............................... 5,002 8,798 100,085
------- -------- --------
Operating expenses:
Cost of operations, excluding depreciation
and amortization expense:
Site leasing.......................... -- 299 17,825
Network services...................... 1,120 2,492 36,489
Selling, general and administrative
expenses................................... 7,390 9,690 38,182
Depreciation and amortization expense........ 489 1,268 37,976
Restructuring and non-recurring charges...... -- -- 7,727
------- -------- --------
Total operating expenses..................... 8,999 13,749 138,199
------- -------- --------
Operating loss............................... (3,997) (4,951) (38,114)
------- -------- --------
Other income (expense):
Interest income............................ 122 3,569 8,951
Interest expense........................... (164) (8,170) (67,513)
Other income (expense)..................... 149 473 (424)
------- -------- --------
Total other income (expense)................. 107 (4,128) (58,986)
------- -------- --------
Loss before income taxes..................... (3,890) (9,079) (97,100)
Income tax expense........................... -- -- 568
------- -------- --------
Net loss..................................... $(3,890) $ (9,079) $(97,668)
======= ======== ========
Loss applicable to common shareholders:
Net loss..................................... $(3,890) $ (9,079) $(97,668)
Accretion of redemption value of preferred
stock...................................... (500) (2,156) (760)
------- -------- --------
Net loss applicable to common shareholders... $(4,390) $(11,235) $(98,428)
======= ======== ========
Net loss per common share:
Basic and diluted.......................... $ (5.21) $ (11.98) $ (12.48)
======= ======== ========
Weighted average common shares outstanding:
Basic and diluted.......................... 842 938 7,886
======= ======== ========
</TABLE>
F-5
<PAGE> 135
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF REDEEMABLE
CONVERTIBLE PREFERRED STOCK AND SHAREHOLDERS' EQUITY (DEFICIENCY)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
REDEEMABLE CONVERTIBLE PREFERRED STOCK SHAREHOLDERS' EQUITY (DEFICIENCY)
-------------------------------------- ---------------------------------
REDEEMABLE REDEEMABLE
CONVERTIBLE CONVERTIBLE CONVERTIBLE CONVERTIBLE CONVERTIBLE
PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK PREFERRED STOCK
SERIES A SERIES B SERIES A SERIES B SERIES C
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Balance at April 25, 1997
(inception).............. $ -- $ -- $ -- $ -- $ --
Issuance of common
stock.................... -- -- -- -- --
Issuance of warrants...... -- -- -- -- --
Issuance of preferred
stock.................... 10,000 -- -- -- --
Stock issuance costs...... -- -- -- -- --
Accretion of redemption
value.................... 500 -- -- -- --
Net loss.................. -- -- -- -- --
-------- -------- ------- ------- --------
Balance at December 31,
1997..................... 10,500 -- -- -- --
Exercise of warrants...... -- -- -- -- --
Issuance of preferred
stock.................... -- 28,000 -- -- --
Stock issuance costs...... -- -- -- -- --
Accretion of redemption
value.................... 800 1,356 -- -- --
Repurchase of common
stock.................... -- -- -- -- --
Net loss.................. -- -- -- -- --
-------- -------- ------- ------- --------
Balance at December 31,
1998..................... 11,300 29,356 -- -- --
Net loss.................. -- -- -- -- --
Foreign currency
translation adjustment... -- -- -- -- --
Total comprehensive
loss.....................
Issuance of common
stock.................... -- -- -- -- --
Stock issuance costs...... -- -- -- -- --
Issuance of Series C
preferred stock.......... -- -- -- -- 301,494
Accretion of redemption
value.................... 200 560 -- -- --
Cancellation of redemption
status of preferred
stock.................... (11,500) (29,916) 10,000 28,000 --
-------- -------- ------- ------- --------
Balance at December 31,
1999..................... $ -- $ -- $10,000 $28,000 $301,494
======== ======== ======= ======= ========
<CAPTION>
SHAREHOLDERS' EQUITY (DEFICIENCY)
---------------------------------
ACCUMULATED
COMMON STOCK ADDITIONAL COMPREHENSIVE OTHER
------------------- PAID-IN INCOME COMPREHENSIVE ACCUMULATED
SHARES AMOUNT CAPITAL (LOSS) INCOME DEFICIT TOTAL
---------- ------ ---------- ------------- ------------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at April 25, 1997
(inception).............. -- $ -- $ -- $ -- $ -- $ --
Issuance of common
stock.................... 931,753 1 2,281 -- -- 2,282
Issuance of warrants...... -- -- 390 -- -- 390
Issuance of preferred
stock.................... -- -- -- -- -- --
Stock issuance costs...... -- -- (180) -- -- (180)
Accretion of redemption
value.................... -- -- (500) -- -- (500)
Net loss.................. -- -- -- $ (3,890) -- (3,890) (3,890)
---------- ---- -------- ======== ---- --------- --------
Balance at December 31,
1997..................... 931,753 1 1,991 -- (3,890) (1,898)
Exercise of warrants...... 150,000 -- -- -- -- --
Issuance of preferred
stock.................... -- -- -- -- -- --
Stock issuance costs...... -- -- (434) -- -- (434)
Accretion of redemption
value.................... -- -- (1,557) -- (599) (2,156)
Repurchase of common
stock.................... (125,000) -- -- -- (500) (500)
Net loss.................. -- -- -- $ (9,079) -- (9,079) (9,079)
---------- ---- -------- ======== ---- --------- --------
Balance at December 31,
1998..................... 956,753 1 -- (14,068) (14,067)
Net loss.................. -- -- -- $(97,668) -- (97,668) (97,668)
Foreign currency
translation adjustment... -- -- -- 192 192 -- 192
--------
Total comprehensive
loss..................... $(97,476)
========
Issuance of common
stock.................... 19,234,851 19 233,844 -- -- 233,863
Stock issuance costs...... -- -- (6,714) -- -- (6,714)
Issuance of Series C
preferred stock.......... -- -- -- -- -- 301,494
Accretion of redemption
value.................... -- -- -- -- (760) (760)
Cancellation of redemption
status of preferred
stock.................... -- -- 3,416 -- -- 41,416
---------- ---- -------- ---- --------- --------
Balance at December 31,
1999..................... 20,191,604 $ 20 $230,546 $192 $(112,496) $457,756
========== ==== ======== ==== ========= ========
</TABLE>
F-6
<PAGE> 136
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM INCEPTION
(APRIL 25, 1997) TO YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1998 DECEMBER 31, 1999
--------------------- ----------------- -----------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss........................................... $(3,890) $ (9,079) $ (97,668)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation..................................... 191 712 31,967
Amortization of goodwill and other intangibles... 298 556 6,009
Amortization of debt issuance costs.............. -- 244 3,086
Non-cash financing charge........................ -- -- 9,000
Loss (gain) on sale of assets.................... 60 (473) 95
Amortization of discount--senior discount
notes.......................................... -- 7,689 43,558
Non-cash compensation charges.................... 2,600 -- 350
Write-off of goodwill............................ -- -- 6,178
Equity in net loss of an affiliate............... -- -- 408
Changes in operating assets and liabilities, net of
acquisitions:
Accounts receivable.............................. (289) (1,451) (8,535)
Interest receivable on short-term investments.... -- (759) --
Costs and estimated earnings in excess of
billings....................................... -- -- (4,240)
Inventories...................................... -- -- 1,526
Prepaid expenses and other....................... 136 (164) (4,024)
Accounts payable................................. 317 591 11,457
Other current liabilities........................ 1,005 (213) 18,388
Other, net....................................... (205) -- --
------- -------- ---------
Net cash provided by (used in) operating
activities....................................... 223 (2,347) 17,555
------- -------- ---------
INVESTING ACTIVITIES
Purchases of property and equipment................ (850) (26,598) (644,778)
Acquisitions, net of cash acquired................. (5,028) (1,989) (128,414)
Proceeds from note receivable...................... -- 41 142
Issuance of note receivable........................ -- -- (500)
Investment in affiliates........................... -- -- (4,167)
Loan to affiliate.................................. -- -- (2,875)
Distribution from affiliate........................ -- 150 --
Purchases of investments........................... -- (30,005) --
Maturities of short-term investments............... -- 15,350 15,414
Proceeds from sale of assets....................... -- 299 22
Repurchase of common stock......................... -- (500) --
Deposits on acquisitions........................... (1,300) (1,750) (48,069)
------- -------- ---------
Net cash used in investing activities.............. (7,178) (45,002) (813,225)
------- -------- ---------
FINANCING ACTIVITIES
Proceeds from issuance of preferred stock.......... 10,000 28,000 231,494
Proceeds from issuance of common stock............. -- -- 1,007
Stock issuance costs............................... (179) (434) (6,714)
Proceeds from issuance of long-term debt........... -- -- 200,000
Proceeds from issuance of senior discount notes.... -- 125,000 340,004
Debt issuance costs................................ -- (4,836) (29,307)
Net repayments on line of credit................... (568) (628) --
Repayment of note to shareholder and other debt.... (64) (2,439) (2,584)
------- -------- ---------
Net cash provided by financing activities.......... 9,189 144,663 733,900
------- -------- ---------
Net increase (decrease) in cash and cash
equivalents...................................... 2,234 97,314 (61,770)
Cash and cash equivalents at beginning of period... -- 2,234 99,548
------- -------- ---------
Cash and cash equivalents at end of period......... $ 2,234 $ 99,548 $ 37,778
======= ======== =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for interest........... $ 64 $ 216 $ 9,019
======= ======== =========
SUPPLEMENTAL DISCLOSURES OF NON CASH INVESTING AND
FINANCING ACTIVITIES
Common stock issued for acquisitions............... $ -- $ 224 $ 217,855
======= ======== =========
Series C preferred stock issued for purchase of
property and equipment........................... $ -- $ -- $ 70,000
======= ======== =========
</TABLE>
F-7
<PAGE> 137
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
FORMATION OF COMPANY
SpectraSite Holdings, Inc. ("SpectraSite") and its wholly owned
subsidiaries (collectively referred to as the "Company"), are principally
engaged in providing services to companies operating in the telecommunications
industry, including leasing antenna sites on multi-tenant towers, network
design, tower construction and antenna installation throughout the United States
and Canada.
SpectraSite, formerly known as Integrated Site Development, Inc. ("ISD"),
was incorporated in the State of Delaware on April 25, 1997. On May 12, 1997,
SpectraSite issued 850,000 shares of its common stock and warrants to purchase
150,000 shares of common stock in exchange for the 850,000 issued and
outstanding shares of common stock and warrants to purchase 150,000 shares of
common stock of US Towers, Inc. ("UST"). SpectraSite's chief executive officer
was the principal shareholder of UST prior to this transaction. One of the
primary purposes of the exchange of shares was the hiring of the chief executive
officer. Since UST had minimal assets and operations, this transaction was
compensatory in nature, rather than a business combination or an asset
acquisition. Accordingly, this transaction resulted in a non-cash compensation
charge of $2.6 million based on the estimated fair value of the stock of $2.60
per share and the estimated fair value of the warrants of $2.60 per warrant at
the date of issuance. The warrants entitled the holder to the right to purchase
150,000 shares of SpectraSite common stock at a price of $0.001 per share,
through 2001. In September and October 1998, all of the warrants were exercised.
On May 12, 1997, SpectraSite acquired all of the outstanding membership
interests of TeleSite Services, LLC ("TeleSite") and its subsidiary, MetroSite
Management, LLC ("MetroSite"), for consideration including $4.9 million in cash,
81,753 shares of common stock valued at $0.2 million and a $2.3 million note
payable. Since SpectraSite had minimal operations prior to this acquisition,
TeleSite is considered SpectraSite'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 Company from the date of acquisition.
In connection with the TeleSite acquisition, SpectraSite was required to
provide additional consideration of 55,919 shares of its common stock based upon
TeleSite achieving certain operating goals through the end of December 31, 1998,
pursuant to a provision in the TeleSite acquisition agreement. The Company
accounted for the obligation as an additional cost of the acquisition, recording
approximately $0.2 million of goodwill and a related long-term liability based
upon the fair value of the Company's common stock at December 31, 1998. During
1999, this obligation was satisfied by the issuance of 55,919 shares of common
stock valued at $0.2 million.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
SpectraSite and its subsidiaries. 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.
F-8
<PAGE> 138
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
SHORT-TERM INVESTMENTS
At December 31, 1998, the Company's short-term investments consisted of
commercial paper and certificates of deposit with maturities of less than one
year. The carrying amount of these investments approximated market value.
REVENUE RECOGNITION
Site leasing revenues are recognized when earned. Escalation clauses
present in the lease agreements with the Company's customers are recognized on a
straight-line basis over the term of the lease. Network service revenues from
site selection, construction and construction management activities are derived
under service contracts with customers which provide for billing on a time and
materials or fixed price basis. Revenues are recognized as services are
performed with respect to time and materials contracts. Revenues are recognized
using the percentage-of-completion method for fixed price contracts, measured by
the percentage of contract costs incurred to date compared to estimated total
contract costs. Costs and estimated earnings in excess of billings on
uncompleted contracts represent revenues recognized in excess of amounts billed.
Billings in excess of costs and estimated earnings on uncompleted contracts
represent billings in excess of revenues recognized. Provisions for estimated
losses on uncompleted contracts are made in the period in which such losses are
determined.
INVENTORIES
Inventories are stated at the lower of cost or market using the first-in,
first-out method and consist primarily of materials purchased for future
construction not associated with specific jobs.
INVESTMENTS
An investment in an entity in which the Company owns more than 20% but less
than 50% is accounted for using the equity method and is included in other
assets. Under the equity method, the investment is stated at cost plus the
Company's equity in net income (loss) of the entity since acquisition. The
equity in net income (loss) of such entity is recorded in "Other income
(expense)" in the accompanying consolidated statements of operations. An
investment in an entity in which the Company owns less than 20% is accounted for
using the cost method and is included in other assets.
PROPERTY AND EQUIPMENT
Property and equipment, including towers, are stated at cost. The Company
capitalizes costs incurred in bringing towers to an operational state. Direct
costs related to the development and construction of towers, including interest,
are capitalized and are included in construction in progress. Approximately $0.1
million and $1.1 million of interest was capitalized for the years ended
December 31, 1998 and 1999, respectively. 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. On an on going basis, the Company
assesses the recoverability of its goodwill by determining its ability to
generate
F-9
<PAGE> 139
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
future cash flows sufficient to recover the unamortized balance over the
remaining useful life. Goodwill determined to be unrecoverable based on future
cash flows would be written-off in the period in which such determination is
made.
DEBT ISSUANCE COSTS
The Company capitalized costs relating to the issuance of long-term debt
and senior discount notes. The costs are amortized using the straight-line
method over the term of the related debt.
INCOME TAXES
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, short-term investments
and the credit facility approximates fair value for these instruments. The
estimated fair value of the senior discount notes is based on the quoted market
price. The estimated fair values of the Company's financial instruments, along
with the carrying amounts of the related assets (liabilities), are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1997 DECEMBER 31, 1998 DECEMBER 31, 1999
------------------ ---------------------- ----------------------
CARRYING FAIR CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE AMOUNT VALUE
-------- ------ --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Cash and cash
equivalents.......... $2,234 $2,234 $ 99,548 $ 99,548 $ 37,778 $ 37,778
Short-term
investments.......... -- -- 15,414 15,414 -- --
12% Senior Discount
Notes due 2008....... -- -- (132,689) (114,871) (149,137) (132,890)
11.25 % Senior Discount
Notes Due 2009....... -- -- -- -- (367,114) (312,471)
Credit Facility........ -- -- -- -- (200,000) (200,000)
</TABLE>
EARNINGS PER SHARE
Basic and diluted earnings per share are calculated in accordance with
Statement of Financial Accounting Standards No. 128 "Earnings per Share." The
Company has potential common stock equivalents related to its convertible
preferred stock and outstanding stock options. These potential common stock
equivalents were not included in diluted earnings per share for all periods
because the effect would have been antidilutive. Accordingly, basic and diluted
net loss per share are the same for all periods presented.
COSTS OF OPERATIONS
Costs of operations for network services consist of direct costs incurred
to provide the related services excluding depreciation and amortization expense.
Costs of operations for site leasing consist of direct costs incurred to provide
the related services including ground lease cost, tower maintenance and related
real estate taxes. Costs of operations for site leasing do not include
depreciation expense of the related leased assets.
F-10
<PAGE> 140
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SIGNIFICANT CUSTOMERS
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. Two customers
accounted for 70.9% of the Company's 1998 revenue. Following is a list of
significant customers:
<TABLE>
<CAPTION>
PERCENT OF
REVENUES
FOR THE PERIOD FROM PERCENT OF REVENUES PERCENT OF
APRIL 25, 1997 PERCENT OF ACCOUNTS FOR THE YEAR ACCOUNTS
(INCEPTION) TO RECEIVABLE AT ENDED RECEIVABLE AT
DECEMBER 31, 1997 DECEMBER 31, 1997 DECEMBER 31, 1998 DECEMBER 31, 1998
------------------- ------------------- ------------------- -----------------
<S> <C> <C> <C> <C>
Customer 1........... 38.9% 75.0% 46.6% 15.6%
Customer 2........... 18.8% -- -- --
Customer 3........... 14.7% -- -- --
Customer 4........... 13.0% -- -- --
Customer 5........... 11.2% -- -- --
Customer 6........... -- -- 24.3% 45.0%
Customer 7........... -- -- -- 22.7%
</TABLE>
In the year ended December 31,1999, one customer, which is a significant
shareholder of the Company, accounted for 35.0% of the Company's revenues.
RESTRUCTURING AND NON-RECURRING CHARGES
In September 1999, the Company announced that it would no longer directly
provide site acquisition services. As a result, the Company recorded
restructuring charges of $7.1 million, of which $6.2 million related to the
write-off of goodwill related to the purchase of TeleSite and $0.9 million was
related to the cost of employee severance. In March 1999, the Company announced
that it would relocate its marketing and administrative operations from Little
Rock, Arkansas and Birmingham, Alabama to its corporate headquarters in Cary,
North Carolina. As a result, the Company recorded a non-recurring charge of $0.6
million for employee termination and other costs related to the relocation of
these activities.
STOCK OPTIONS
The Company has elected under the provisions of Statement of Financial
Accounting Standards 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 for its
employees 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.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In 1998, the Company adopted Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income" ("SFAS 130"), which establishes
standards for reporting and display of comprehensive income and its components
in a full set of general-purpose financial statements. SFAS 130 only impacts
financial statement presentation as opposed to actual amounts recorded. Other
comprehensive income includes all nonowner changes in equity that are excluded
from net income. During the period
F-11
<PAGE> 141
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
from inception (April 25, 1997) to December 31, 1997 and during the year ended
December 31, 1998, the Company had no items of other comprehensive income.
During the year ended December 31, 1999, the Company had other comprehensive
income related to foreign currency translation adjustments.
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 did not have a significant impact on the Company's financial
position at December 31, 1998 or its results of operations for the year ended
December 31, 1998 as the Company operated in only one segment. During 1999, the
Company commenced operations in a second business segment.
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"). SFAS 133 requires that derivative instruments be recognized as either
assets or liabilities in the consolidated balance sheet based on their fair
values. Changes in the fair values of such derivative instruments will be
recorded either in results of operations or in other comprehensive income,
depending on the intended use of the derivative instrument. The initial
application of SFAS 133 will be reported as the effect of a change in accounting
principle. SFAS 133 is effective for all fiscal years beginning after June 15,
2000. We have not yet determined the effect that the adoption of SFAS 133 will
have on our consolidated financial statements.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1997 and 1998 consolidated
financial statements to conform to the 1999 presentation. These
reclassifications had no effect on net loss or shareholders' deficiency as
previously reported.
2. LONG-LIVED ASSETS
Property and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Towers.......................................... $24,780 $723,075
Equipment....................................... 823 9,884
Furniture and fixtures.......................... 288 2,256
Other........................................... 212 15,240
------- --------
26,103 750,455
Less accumulated depreciation................... (870) (32,837)
------- --------
25,233 717,618
Construction in progress........................ 3,236 46,139
------- --------
Property and equipment, net..................... $28,469 $763,757
======= ========
</TABLE>
F-12
<PAGE> 142
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Goodwill and other intangible assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Goodwill........................................ $ 8,963 $280,666
Debt issuance costs............................. 4,836 33,955
------- --------
13,799 314,621
Less accumulated amortization................... (1,042) (7,424)
------- --------
$12,757 $307,197
======= ========
</TABLE>
Other assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1999
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Deposits........................................ $1,750 $49,153
Other........................................... 402 10,302
------ -------
$2,152 $59,455
====== =======
</TABLE>
3. DEBT
11.25% SENIOR DISCOUNT NOTES DUE 2009
In April 1999, the Company issued $586.8 million aggregate principal amount
at maturity of senior discount notes due 2009 (the "2009 Notes") for gross
proceeds of $340.0 million. Interest on the 2009 Notes accretes daily at a rate
of 11.25% per annum, compounded semiannually, to an aggregate principal amount
of $586.8 million on April 15, 2004. Cash interest will not accrue on the 2009
Notes prior to April 15, 2004. Commencing April 15, 2004, cash interest will
accrue and be payable semiannually in arrears on each April 15 and October 15,
commencing October 15, 2004, at a rate of 11.25% per annum. After April 15,
2004, the Company may redeem all or a portion of the 2009 Notes at specified
redemption prices, plus accrued and unpaid interest, to the applicable
redemption date. On one or more occasions prior to April 15, 2002, the Company
may redeem up to 35% of the aggregate principal amount at maturity of the 2009
Notes with the net cash proceeds from one or more equity offerings. The
redemption price would be 111.25% of the accreted value on the redemption date.
The Company is required to comply with certain covenants under the terms of the
2009 Notes that restrict the Company's ability to incur additional indebtedness,
make certain payments and issue preferred stock, among other things.
12% SENIOR DISCOUNT NOTES DUE 2008
In June 1998, the Company issued $225.2 million aggregate principal amount
at maturity of senior discount notes due 2008 (the "2008 Notes") for gross
proceeds of $125.0 million. The 2008 Notes accrete daily at a rate of 12% per
annum, compounded semiannually, to an aggregate principal amount of $225.2
million on July 15, 2003. Cash interest will not accrue on the 2008 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 a rate of 12% per annum. After July 15, 2003, the Company
may redeem all or a portion of the 2008 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 2008 Notes issued with the net
cash proceeds from one or more equity offerings. The redemption price would be
112%
F-13
<PAGE> 143
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
of the accreted value on the redemption date. The Company is required to comply
with certain covenants under the terms of the 2008 Notes that restrict the
Company's ability to incur indebtedness, make certain payments and issue
preferred stock among other things.
During the years ended December 31, 1998 and 1999, the Company recorded
amortization of debt discount of approximately $7.7 million and $43.6 million
related to the 2008 Notes and 2009 Notes as additional interest expense. The
senior discount notes consist of the following:
<TABLE>
<CAPTION>
AS OF
DECEMBER 31,
---------------------------
1998 1999
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Senior discount notes........................... $225,238 $ 812,038
Unamortized discount............................ (92,549) (295,787)
-------- ---------
$132,689 $ 516,251
======== =========
</TABLE>
CREDIT FACILITY
In April 1999 in connection with the acquisition of communications towers
from Nextel Communications, Inc. ("Nextel"), SpectraSite Communications, Inc.
("Communications"), a wholly-owned subsidiary of SpectraSite, entered into a
$500.0 million credit facility. The credit facility consists of a $50.0 million
revolving credit facility that subject to the satisfaction of certain financial
covenants, may be drawn at any time up to December 31, 2005, at which time all
amounts drawn under the revolving credit facility must be paid in full; a $300.0
million multiple draw term loan that may be drawn at any time through March 31,
2002, which requires that the amount drawn be repaid in quarterly installments
commencing on June 30, 2002 and ending on December 31, 2005; and a $150.0
million term loan that was drawn in full at the closing of the Nextel tower
acquisition and that amortizes at a rate of 1.0% annually, payable in quarterly
installments beginning on June 30, 2002 through December 31, 2005, $67.5 million
on March 31, 2006 and the balance due on June 30, 2006.
The revolving credit loans and the multiple draw term loans will bear
interest, at our option, at either Canadian Imperial Bank of Commerce'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 the reserve adjusted
London interbank offered rate, plus an applicable margin of 3.0% per annum
initially, which margin after a period of time may decrease based on a leverage
ratio.
The term loan bears interest, at our option, at either Canadian Imperial
Bank of Commerce's base rate, plus 2.0% per annum, which margin after a period
of time may decrease based on a leverage ratio, or the reserve adjusted London
interbank offered rate, plus 3.5% per annum, which margin after a period of time
may decrease based on a leverage ratio.
Communications will be required to pay a commitment fee of between 1.25%
and 0.50% per annum in respect of the undrawn portion of the multiple draw term
loan, depending on the amount undrawn. We are required to pay a commitment fee
of 0.50% per annum in respect of the undrawn portion of the revolving credit
facility.
Communications may be required to prepay the credit facility in part upon
the occurrence of certain events, such as a sale of assets, the incurrence of
certain additional indebtedness, the issuance of equity and the generation of
excess cash flow.
SpectraSite and each of Communications' subsidiaries has guaranteed the
obligations under the credit facility. The credit facility is further secured by
substantially all the tangible and intangible assets of
F-14
<PAGE> 144
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Communications and its subsidiaries and a pledge of all of the capital stock of
Communications and its subsidiaries.
The credit facility contains a number of covenants that, among other
things, restrict our ability to incur additional indebtedness; create liens on
assets; make investments, make acquisitions, or engage in mergers or
consolidations; dispose of assets; enter into new lines of business; engage in
certain transactions with affiliates; and pay dividends or make capital
distributions. SpectraSite, however, will be permitted to pay dividends after
July 15, 2003, for the purpose of paying interest on the 2008 Notes and the 2009
Notes so long as no default under the credit facility then exists or would exist
after giving effect to such payment.
In addition, the credit facility requires compliance with certain financial
covenants, including requiring Communications and its subsidiaries, on a
consolidated basis, to maintain a maximum ratio of total debt to annualized
EBITDA; a minimum interest coverage ratio; a minimum fixed charge coverage
ratio; and a minimum annualized EBITDA, for the first year only.
OTHER LONG-TERM DEBT
Long-term debt, other than the 2008 Notes and 2009 Notes, consists of the
following:
<TABLE>
<CAPTION>
AS OF
DECEMBER 31,
----------------
1998 1999
---- --------
(IN THOUSANDS)
<S> <C> <C>
Credit facility........................................... $ -- $200,000
Other obligations......................................... 18 3,128
Less current portion...................................... (18) (601)
---- --------
Long-term debt, less current portion...................... $ -- $202,527
==== ========
</TABLE>
In connection with the acquisition of Westower Corporation ("Westower"),
the Company assumed certain long-term obligations of the acquired entity.
Substantially all of Westower's outstanding long-term obligations were repaid
prior to the acquisition, with the remaining unpaid obligations payable in
monthly installments through 2004. Other obligations for the year ended December
31, 1998 consisted of installment notes payable to a bank, which were
subsequently paid during 1999.
BANK CREDIT AGREEMENT
In January 1998, the Company signed a letter of intent with a bank for a
$50.0 million revolving credit facility for the purpose of financing the
construction and/or the acquisition of telecommunication towers for personal
communications services or other wireless communication services and other
permitted acquisitions as defined by the agreement, contingent upon certain
events. In the year ended December 31, 1998 the Company incurred approximately
$0.3 million in commitment fees related to the agreement. The agreement expired
on December 31, 1998.
4. CONVERTIBLE VOTING PREFERRED STOCK AND SHAREHOLDERS' EQUITY
SERIES A AND B CONVERTIBLE VOTING PREFERRED STOCK
At December 31, 1998, Spectrasite had mandatorily redeemable convertible
preferred stock consisting of Series A and Series B cumulative redeemable
preferred stock, each with a $0.001 par value, 10,462,830 shares authorized in
the aggregate and 3,462,830 and 7,000,000 shares issued and outstanding,
respectively. In connection with closing the Nextel tower acquisition,
provisions for dividends and redemption were
F-15
<PAGE> 145
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
eliminated with respect to the Series A and Series B preferred stock. Previously
accrued dividends have been eliminated, and the outstanding balances have been
reclassified as convertible preferred stock in shareholders' equity in the
balance sheet as of December 31, 1999. Each share of Series A and Series B
preferred stock is convertible into one share of common stock and entitles the
holder to vote on an as-converted basis with holders of common stock.
Contemporaneously with the closing of an underwritten public offering of common
stock, the outstanding shares of Series A and Series B preferred stock
automatically converted to common stock on February 4, 2000.
SERIES C CONVERTIBLE PREFERRED STOCK
In connection with closing the Nextel tower acquisition, SpectraSite sold
46,286,795 shares of Series C preferred stock at a price of $5.00 per share. In
addition, Nextel received 14 million shares of Series C preferred stock. At
December 31, 1999, SpectraSite had 60,286,795 of $0.001 par value Series C
shares authorized, issued and outstanding. Each share of Series C preferred
stock is convertible into one share of common stock and entitles the holder to
vote on an as-converted basis with holders of common stock. Contemporaneously
with the closing of an underwritten public offering of common stock, the
outstanding shares of Series C preferred stock automatically converted to common
stock on February 4, 2000.
COMMON STOCK
In connection with the Nextel tower acquisition, SpectraSite also restated
its certificate of incorporation. The amended and restated certificate
authorized 85 million shares of common stock, $0.001 par value per share. In
addition, the Company increased the maximum number of shares for which options
may be granted under its stock option plan to 4.1 million.
In August 1999, SpectraSite amended its restated certificate of
incorporation to increase the authorized shares of common stock to 300 million.
In addition, SpectraSite increased the maximum number of shares for which
options may be granted under its stock option plan to 10 million and authorized
one million shares to be issued under an Employee Stock Purchase Plan.
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.
On October 9, 1998, the Company paid a former employee $500,000 under an
agreement to buy 125,000 shares of SpectraSite common stock from the former
employee for an agreed upon price and to release the Company from any potential
claims. 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. The shares were subsequently
purchased by a shareholder of the Company on February 5, 1999 for an aggregate
purchase price of $150,000.
STOCK OPTIONS
During 1997, the Company adopted a stock option plan which provides for the
purchase of common stock by key employees, directors, advisors and consultants
of the Company. The maximum number of shares for which options may be granted
under the plan shall not exceed 10 million shares. Stock options are granted
under various stock option agreements. Each stock option agreement contains
specific terms.
F-16
<PAGE> 146
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
During the period from inception (April 25, 1997) to December 31, 1997 and the
years ended December 31, 1998 and 1999, option grants were made solely to
employees.
The options without a performance acceleration feature, which were granted
under the terms of the incentive stock option agreement, and options granted
under the terms of the non-qualified stock option agreement vest and become
exercisable ratably over a four or five-year period, commencing one year after
date of grant.
The options with a performance acceleration feature, which were granted
under the terms of 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 period ended December 31, 1997, the years
ended December 31, 1998 and 1999: dividend yield of 0.0%; volatility of .70;
risk free interest rate of 6.0% to 5.0%; 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 and net loss per share would have been $4.0 million and
$5.37 for the period ended December 31, 1997, $9.5 million and $12.44 for the
year ended December 31, 1998 and $100.9 million and $12.80 for the year ended
December 31, 1999.
Option activity under the Company's plans is summarized below:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
SHARES EXERCISE PRICE
--------- ----------------
<S> <C> <C>
Outstanding at April 25, 1997................. -- $ --
Options granted............................... 884,700 2.89
Options exercised............................. -- --
Options canceled.............................. -- --
---------
Outstanding at December 31, 1997.............. 884,700 2.89
Options granted............................... 842,000 3.33
Options exercised............................. -- --
Options canceled.............................. (158,800) 2.92
---------
Outstanding at December 31, 1998.............. 1,567,900 3.12
Options granted............................... 2,705,810 5.32
Options exercised............................. (200,006) 2.52
Options canceled.............................. (271,670) 3.41
Options assumed in Westower acquisition....... 1,921,757 8.62
---------
Outstanding at December 31, 1999.............. 5,723,791 6.02
=========
</TABLE>
At December 31, 1997, there were no options exercisable under the stock
option plan. There were 185,475 and 1,765,666 options exercisable under the
stock option plan at December 31, 1998 and 1999, respectively.
F-17
<PAGE> 147
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- ---------------------------------------------------------------------------------
------------------------------
NUMBER WEIGHTED NUMBER
OUTSTANDING AVERAGE EXERCISABLE
AS OF REMAINING WEIGHTED AVERAGE AS OF WEIGHTED AVERAGE
EXERCISE PRICES 12/31/99 CONTRACTUAL LIFE EXERCISE PRICE 12/31/99 EXERCISE PRICE
- --------------- ----------- ---------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
$0.01-$ 4.56 2,061,273 7.92 $ 3.75 1,113,320 $ 3.97
$5.00-$ 5.00 2,382,810 9.41 5.00 -- --
$6.35-$17.06 1,279,708 9.14 11.55 652,346 12.16
--------- ---------
$0.01-$17.06 5,723,791 8.81 6.02 1,765,666 7.00
========= =========
</TABLE>
The weighted average remaining contractual life of the stock options
outstanding was 8.76 years, 9.98 years and 8.81 years at December 31, 1997, 1998
and 1999, respectively.
EMPLOYEE STOCK PURCHASE PLAN
In August 1999, SpectraSite adopted the SpectraSite Holdings, Inc. Employee
Stock Purchase Plan. The board of directors has reserved and authorized one
million shares of common stock for issuance under the plan. Eligible employees
may purchase a number of shares of common stock equal to the total dollar amount
contributed by the employee to a payroll deduction account during each six-month
offering period divided by the purchase price per share. The price of the shares
offered to employees under the plan will be 85% of the lesser of the fair market
value at the beginning or end of each six-month offering period. As of December
31, 1999, SpectraSite had not initiated an offering period.
COMMON STOCK RESERVED FOR FUTURE ISSUANCE
The Company has reserved shares of its authorized shares of common stock
for future issuance as follows:
<TABLE>
<CAPTION>
AS OF
DECEMBER 31, 1999
-----------------
<S> <C>
Convertible preferred stock...................... 70,749,625
Outstanding stock options........................ 5,723,791
Possible future issuance under stock option
plans.......................................... 4,076,203
Employee stock purchase plan..................... 1,000,000
----------
Total............................................ 81,549,619
==========
</TABLE>
5. LEASES
OPERATING LEASES FROM OTHERS
The Company leases land ("ground leases"), office space and certain office
equipment under noncancelable operating leases. Ground leases are generally for
terms of five years and are renewable at the option of the Company. Rent expense
was approximately $0.2 million, $0.6 million and $17.9 million
F-18
<PAGE> 148
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
for the period from April 25, 1997 (inception) to December 31, 1997 and the
years ended December 31, 1998 and 1999, respectively. The future minimum lease
payments for these leases are as follows:
<TABLE>
<CAPTION>
AS OF
DECEMBER 31, 1999
-----------------
(IN THOUSANDS)
<S> <C>
2000............................................. $ 24,686
2001............................................. 22,618
2002............................................. 19,055
2003............................................. 13,121
2004............................................. 8,139
Thereafter....................................... 22,725
--------
Total............................................ $110,344
========
</TABLE>
ANTENNA SPACE LEASED TO OTHERS
The Company currently leases antenna space on multi-tenant towers to a
variety of wireless service providers under non-cancelable operating leases. The
tenant leases are generally for terms of five years and include options for
renewal. 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>
AS OF
DECEMBER 31, 1999
-----------------
(IN THOUSANDS)
<S> <C>
2000............................................. $ 63,494
2001............................................. 63,872
2002............................................. 61,548
2003............................................. 58,403
2004............................................. 43,861
Thereafter....................................... 10,684
--------
Total............................................ $301,862
========
</TABLE>
6. INCOME TAXES
The provision for income taxes is comprised of the following:
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(APRIL 25, 1997) TO YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1998 1999
------------------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
State...................... $ -- $ -- $ 40
Foreign.................... -- -- 528
---------- ---------- ----------
Total provision for income
taxes.................... $ -- $ -- $ 568
========== ========== ==========
</TABLE>
F-19
<PAGE> 149
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The reconciliation of income taxes computed at the U.S. federal statutory
rate to income tax provision (benefit) is as follows:
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(APRIL 25, 1997) TO YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1998 1999
------------------- ------------ ------------
<S> <C> <C> <C>
Federal income tax benefit at statutory
rate..................................... (35.0)% (35.0)% (35.0)%
Foreign tax rate differential.............. -- -- 0.6%
Non-deductible goodwill amortization....... -- -- 2.0%
Non-deductible interest expense............ -- 5.8% 0.5%
Change in valuation allowance.............. 35.0% 29.2% 32.5%
---------- ---------- ----------
Effective income tax rate.................. --% --% 0.6%
========== ========== ==========
</TABLE>
The components of net deferred taxes are as follows:
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
---------------------------
1997 1998 1999
----- ------ --------
(IN THOUSANDS)
<S> <C> <C> <C>
Deferred tax assets:
Tax loss carry forwards................................... $ 183 $1,038 $ 15,600
Accreted interest on senior discount notes................ -- 2,978 19,730
Accrued liabilities....................................... -- -- 1,920
Depreciation.............................................. -- 41 1,760
----- ------ --------
Total gross deferred tax assets........................ 183 4,057 39,010
Valuation allowance....................................... (183) (4,057) (39,010)
----- ------ --------
Total net deferred tax assets.......................... $ -- $ -- $ --
===== ====== ========
</TABLE>
The Company has a federal net operating loss carry forward of approximately
$40 million that begins to expire in 2012. Also, the Company has state tax
losses of $40 million that expire beginning in 2002. Based on the Company's
history of losses to date, management has provided a valuation allowance to
fully offset the deferred assets related to federal and state net operating loss
carry forwards.
7. RELATED PARTY TRANSACTIONS
In conjunction with the acquisition of TeleSite, the Company issued a $2.3
million note payable to a shareholder. In the period from April 25, 1997
(inception) to December 31, 1997 and during the year ended December 31, 1998,
the Company incurred approximately $100,000 and $81,000 of interest expense
related to the note payable to shareholder, respectively. In June 1998, the note
was repaid in full.
On April 20, 1999, in connection with the Nextel tower acquisition, four
directors purchased 50,000, 25,000, 262,973 and 100,000 shares of SpectraSite's
Series C preferred stock for $5.00 per share, respectively. In addition, one
director 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, 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 the director at any time prior to April 20,
2000 and upon the date the director ceases to perform services for SpectraSite.
F-20
<PAGE> 150
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Affiliates of three significant stockholders received an aggregate of two
million shares of SpectraSite's common stock valued at $9.0 million as
consideration for financing commitments made in connection with the Nextel tower
acquisition. Affiliates of each entity are members of the Company's board
directors.
To finance a portion of the cash consideration paid to Nextel, SpectraSite
issued and sold the 2009 Notes 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. CIBC World Markets was also an initial
purchaser of SpectraSite's 2008 Notes. CIBC World Markets and its affiliates
received customary fees for such services. One director of SpectraSite is a
Managing Director of CIBC World Markets.
In May 1997, an officer agreed to invest additional personal funds in
SpectraSite at the average per share price of Series A and Series B preferred
stock. In satisfaction of this commitment, the officer purchased 210,000 shares
of common stock for an aggregate purchase price of $0.8 million on April 20,
1999.
In August 1999, SpectraSite loaned an officer $325,000 in connection with
the exercise of certain stock options. The 112,500 shares the officer 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 an officer $500,000 to purchase a
home as a relocation incentive. This loan will be secured by any shares of
SpectraSite's common stock issued to the officer upon exercise of options, bears
interest at 5.82% per annum and matures in September 2004.
The Company has a revolving loan arrangement with an affiliate under which
the affiliate may borrow up to $14.4 million. The loan accrues interest at 12%
and is collateralized by property, equipment, investments, contracts and other
assets of the affiliate. At December 31, 1999, the affiliate owed $2.9 million
to the Company under the loan. In 1999, the Company had interest income of $0.1
million from amounts outstanding under the loan.
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 expenses related to
the plan are discretionary and totaled approximately $11,000, $31,000 and
$121,000 for the period from April 25, 1997 (inception) to December 31, 1997 and
for the years ended December 31, 1998 and 1999, respectively.
9. SALE OF AFFILIATES
In February 1998, the Company entered into an agreement under which it sold
a wholly-owned subsidiary, MetroSite, for $299,000. The Company recognized a
gain on the sale of $257,000.
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 total amount due to the Company at December 31, 1999 is $261,000 of
which the current portion, $73,000, is included in prepaid expenses and other
current assets in the accompanying balance sheet. 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 $1.4 million 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 $1.3 million in cash and recorded notes payable for $0.1 million in
conjunction with the acquisition. The outstanding note payable was subsequently
paid in December 1998.
F-21
<PAGE> 151
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In August 1998, the Company entered into an asset purchase agreement with
Airadigm Communications, Inc. ("Airadigm") for the purchase of 47 towers for
approximately $11.8 million. As of December 31, 1998, 40 towers had been placed
in service. During 1999, five additional towers were placed in service and
Airadigm refunded the Company's deposit for the remaining two towers. Under the
terms of the agreement, the Company will lease 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 related to 14 towers for approximately $474,000.
In September 1998, the Company acquired all of the outstanding common stock
of GlobalComm, Inc. for $2.0 million in cash in a transaction accounted for as a
purchase. The results of operations of GlobalComm are included in the Company's
operations from the date of acquisition. The Company recorded approximately $1.7
million of goodwill related to the transaction.
In April 1999, the Company purchased 2,000 communications towers from
Nextel for $560.0 million in cash and 14 million shares of Series C preferred
stock valued at $70.0 million, which represented approximately 18% of all the
Company's outstanding capital stock. As part of the transaction, Nextel agreed
to lease 1,700 additional sites on the Company's towers as part of Nextel's
national deployment. SpectraSite and certain of Nextel's subsidiaries entered
into a master site commitment agreement under which Nextel and its controlled
affiliates will offer SpectraSite exclusive opportunities, under specific 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 is less than the agreed upon number as of particular dates,
Nextel has agreed to make payments to SpectraSite. 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. Of the total consideration
paid to Nextel, $45.0 million has been allocated as a deposit relating to this
commitment. The Company used $150.0 million of borrowings under a $500.0 million
committed credit facility, $340.0 million from the proceeds of the 2009 Notes
and $231.4 million from the sale of new Series C preferred stock to fund the
cash purchase price and to pay related fees and expenses.
In connection with the purchase, Nextel entered into a master site lease
agreement to become the anchor tenant on each of the acquired towers and also
conveyed to the Company certain third-party co-location site leases associated
with the acquired assets. Nextel also transferred to the Company certain
non-cancelable ground leases, and the Company assumed all operating and other
costs associated with the acquired assets.
In September 1999, the Company consummated the Agreement and Plan of
Merger, dated as of May 15, 1999 with Westower. Under the terms of the
agreement, Westower shareholders received 1.81 shares of SpectraSite common
stock for each share of Westower common stock. In the aggregate, SpectraSite
exchanged 15.5 million shares of its common stock valued at $205.6 million for
8.6 million shares of Westower common stock and assumed $81.5 million of debt.
The Company repaid $72.2 million of such assumed debt at closing. In addition,
the Company assumed the outstanding Westower employee stock options, which were
converted into options to purchase 1.7 million shares of SpectraSite's common
stock.
On December 30, 1999, SpectraSite acquired Stainless, Inc., formerly a
wholly-owned subsidiary of Northwest Broadcasting, L.P., for $40.0 million in
cash. Stainless provides engineering, fabrication and other services in
connection with the erection of towers used for television broadcast companies.
Also on December 30, 1999, SpectraSite acquired Doty-Moore Tower Services,
Inc., Doty-Moore Equipment Company, Inc. and Doty Moore RF Services, Inc. for
$2.5 million in cash and 500,000 shares of SpectraSite's common stock valued at
$5.4 million. Doty-Moore is a leading source for broadcast tower construction
and technical services.
F-22
<PAGE> 152
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The acquisitions of Westower, Stainless and Doty-Moore were accounted for
as purchases, and the excess of cost over fair value of the net assets acquired
is being amortized on a straight-line basis over fifteen years. The operations
of each are included in the consolidated statement of operations from the date
of acquisition.
The following unaudited pro forma summary presents consolidated results of
operations for the Company as if the acquisitions of Westower, Doty-Moore and
Stainless had been consummated as of January 1, 1999. The pro forma information
does not necessarily reflect the actual results that would have been achieved,
nor is it necessarily indicative of future consolidated results for the Company.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1999
------------------------
(IN THOUSANDS OF DOLLARS
EXCEPT PER SHARE DATA)
<S> <C>
Net revenues........................................ $ 187,082
Net loss............................................ (112,515)
Basic and diluted net loss per common share......... (5.11)
</TABLE>
11. BUSINESS SEGMENTS
The Company previously operated in one business segment. As a result of the
Nextel tower and Westower acquisitions, the Company now operates in two business
segments, site leasing and network services. Prior period information has been
restated to reflect the current business segments. The site leasing segment
provides for leasing and subleasing of antennae sites on multi-tenant towers for
a diverse range of wireless communication services, including personal
communication services, paging, cellular and microwave. The network services
segment offers a broad range of network development services, including network
design, tower construction and antenna installation.
In evaluating financial performance, management focuses on operating profit
(loss), excluding depreciation and amortization and restructuring charges. This
measure of operating profit (loss) is also before interest income, interest
expense, other income (expense) and income taxes. All reported segment revenues
are generated from external customers as intersegment revenues are not
significant.
Summarized financial information concerning each reportable segment is
shown in the following table. The "Other" column represents amounts excluded
from specific segments, such as income taxes, corporate general and
administrative expenses, depreciation and amortization, restructuring and other
non-recurring charges and interest. In addition, "Other" also includes corporate
assets such as cash and cash equivalents, tangible and intangible assets and
income tax accounts which have not been allocated to a specific segment.
<TABLE>
<CAPTION>
SITE NETWORK
LEASING SERVICES OTHER TOTAL
-------- -------- --------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1999
Revenues.......................................... $ 46,515 $53,570 $ -- $ 100,085
Income (loss) before income taxes................. 28,661 7,915 (133,676) (97,100)
Assets............................................ 756,442 60,149 403,362 1,219,953
YEAR ENDED DECEMBER 31, 1998
Revenues.......................................... $ 656 $ 8,142 $ -- $ 8,798
Income (loss) before income taxes................. 357 5,650 (15,086) (9,079)
Assets............................................ 25,865 -- 136,081 161,946
</TABLE>
F-23
<PAGE> 153
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
SITE NETWORK
LEASING SERVICES OTHER TOTAL
-------- -------- --------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
PERIOD FROM INCEPTION (APRIL 25, 1997) TO DECEMBER
31, 1997
Revenues.......................................... $ -- $ 5,002 $ -- $ 5,002
Income (loss) before income taxes................. -- (3,997) 107 (3,890)
Assets............................................ -- -- 13,642 13,642
</TABLE>
From inception (April 25, 1997) until the acquisition of Westower on
September 2, 1999, all of the Company's operations were located in the United
States.
Net revenues for the year ended December 31, 1999 were located in
geographic areas as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
United States........................................ $ 90,984
Canada............................................... 13,794
Eliminations......................................... (4,693)
--------
Consolidated net revenues............................ $100,085
========
</TABLE>
At December 31, 1999, assets were located in geographic areas as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
United States........................................ $1,065,256
Canada............................................... 65,153
----------
Consolidated long-lived assets....................... $1,130,409
==========
</TABLE>
12. YEAR 2000 ISSUE (UNAUDITED)
The Company has not experienced any immediate adverse impact from the
transition to the Year 2000; however, management cannot provide assurance that
the company, it's suppliers or it's customers have not been affected in a manner
that is not yet apparent. In addition, certain computer programs which were date
sensitive to the Year 2000 may not process the Year 2000 as a leap year, and any
negative consequential effects remain unknown. As a result, the Company
continues to monitor Year 2000 compliance and the Year 2000 compliance of its
suppliers and customers.
13. SUBSEQUENT EVENTS (UNAUDITED)
On January 5, 2000, SpectraSite acquired Vertical Properties, Inc. in a
merger transaction under which SpectraSite issued 225,000 unregistered shares of
its common stock and repaid outstanding indebtedness of approximately $2.0
million. Vertical Properties is a broadcast tower development company formed to
meet the needs of broadcasters in secondary broadcast markets faced with the
complexities of converting to digital technology through site acquisition, tower
placement and leasing of antenna space.
On January 5, 2000, SpectraSite acquired Apex Site Management Holdings,
Inc. ("Apex") in a merger transaction. Apex provides rooftop and in-building
access to wireless carriers. SpectraSite issued approximately 4.5 million
unregistered shares of its common stock and approximately 194,000 options to
purchase common stock at an exercise price of $3.58 per share to the
shareholders of Apex at the closing of the merger. In addition, SpectraSite
issued approximately 1.5 million additional shares of common stock into escrow.
These shares may be released to Apex's shareholders six months after
SpectraSite's currently pending public offering is consummated based on the
average trading price for SpectraSite's common stock for the 30-day period
immediately preceding the six-month anniversary of the public offering.
SpectraSite also used approximately $6.2 million in cash to repay outstanding
indebtedness and other obligations of Apex in connection with the merger.
F-24
<PAGE> 154
SPECTRASITE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
On January 28, 2000, SpectraSite acquired substantially all of the assets
of International Towers Inc. and its subsidiaries, including S&W Communications
Inc. International Towers owns a broadcast tower manufacturing facility and,
through S&W Communications, provides integrated services for the erection of
broadcast towers, foundations and multi-tenant transmitter buildings.
SpectraSite paid $5.5 million and issued an aggregate of 350,000 unregistered
shares of its common stock in connection with this acquisition.
On February 4, 2000, SpectraSite completed an underwritten public offering
of 25.6 million shares of common stock for net proceeds of approximately $411.3
million. As a result of the offering, all Series A, B, C preferred stock
automatically converted to common stock on a share-for-share basis.
On February 17, 2000, the company signed a definitive agreement with
AirTouch Communications, Inc. to obtain the rights to approximately 430 towers
through a master sublease for approximately $155 million. The transaction is
expected to close in stages with the initial closing to occur no later than
November 15, 2000, if certain conditions are met.
F-25
<PAGE> 155
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-26
<PAGE> 156
TELESITE SERVICES, LLC
CONSOLIDATED BALANCE SHEET
AS OF 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-27
<PAGE> 157
TELESITE SERVICES, LLC
CONSOLIDATED STATEMENTS 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
Costs of operations......................................... 2,254,777 594,683
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)
========== ==========
Pro forma income data (unaudited):
Net income (loss) as reported............................. $2,289,073 $ (503,206)
Pro forma provision for income taxes...................... 892,783 --
---------- ----------
Pro forma net income (loss)............................... $1,396,290 $ (503,206)
========== ==========
</TABLE>
See accompanying notes.
F-28
<PAGE> 158
TELESITE SERVICES, LLC
CONSOLIDATED STATEMENTS 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
Contribution to capital................................... 100
Distributions to members.................................. (211,256)
Net loss.................................................. (503,206)
----------
Members' equity at May 12, 1997............................. $ 163,111
==========
</TABLE>
See accompanying notes.
F-29
<PAGE> 159
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-30
<PAGE> 160
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.
F-31
<PAGE> 161
TELESITE SERVICES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
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 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-32
<PAGE> 162
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 10.0%, 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.
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.
F-33
<PAGE> 163
TELESITE SERVICES, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. RELATED PARTY TRANSACTIONS -- (CONTINUED)
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. PRO FORMA INCOME DATA (UNAUDITED)
The pro forma provision for income taxes is based upon the statutory income
tax rates in effect during the year ended December 31, 1996. No provision was
provided in the period from January 1 to May 12, 1997 due to the net operating
loss.
8. 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-34
<PAGE> 164
WESTOWER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AT JUNE 30, 1999 AND SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1999 1998
------------ -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents................................. $ 4,204,000 $ 9,331,000
Accounts receivable, net.................................. 20,506,000 13,289,000
Costs and estimated earnings in excess of billings on
uncompleted contracts.................................. 6,758,000 5,078,000
Inventory................................................. 3,133,000 2,151,000
Related party advances and receivables.................... 419,000 956,000
Income tax receivable..................................... 220,000 220,000
Other current assets...................................... 1,744,000 1,203,000
------------ -----------
Total current assets................................... 36,984,000 32,228,000
PROPERTY AND EQUIPMENT, net................................. 50,217,000 7,574,000
INTANGIBLE ASSETS, net...................................... 26,992,000 19,721,000
OTHER ASSETS................................................ 6,139,000 2,771,000
------------ -----------
TOTAL ASSETS................................................ $120,332,000 $62,294,000
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable.................................... $ 8,374,000 $ 7,053,000
Other current liabilities................................. 1,909,000 2,810,000
Billings in excess of costs and estimated earnings on
uncompleted contracts.................................. 1,586,000 1,435,000
Income taxes payable...................................... 2,450,000 2,116,000
Deferred income taxes..................................... 395,000 428,000
Stockholder advances and notes payable to related
parties................................................ 154,000 228,000
Note payable.............................................. 68,000 1,089,000
Current portion of long-term debt and capital lease
obligations............................................ 1,576,000 2,419,000
------------ -----------
Total current liabilities......................... 16,512,000 17,578,000
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, excluding
current portion........................................... 57,059,000 14,991,000
DEFERRED INCOME TAXES....................................... 2,977,000 2,962,000
------------ -----------
Total liabilities................................. 76,548,000 35,531,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock ($.01 par value, 25,000,000 and 10,000,000
shares authorized, 8,562,000 and 7,047,000 shares
issued and outstanding at June 30, 1999 and September
30, 1998, respectively)................................ 85,000 70,000
Additional paid-in-capital................................ 39,818,000 22,610,000
Accumulated other comprehensive loss...................... (237,000) (581,000)
Retained earnings......................................... 4,118,000 4,664,000
------------ -----------
Total stockholders' equity........................ 43,784,000 26,763,000
------------ -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY........ $120,332,000 $62,294,000
============ ===========
</TABLE>
F-35
<PAGE> 165
WESTOWER CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED JUNE 30, 1999 AND 1998
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1999 JUNE 30, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
CONTRACT AND OTHER REVENUES
EARNED........................... $25,184,000 $12,637,000 $68,455,000 $35,995,000
COSTS OF REVENUES EARNED (exclusive
of depreciation shown below)..... 17,688,000 9,609,000 48,418,000 26,659,000
----------- ----------- ----------- -----------
Gross profit..................... 7,496,000 3,028,000 20,037,000 9,336,000
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES......................... 5,128,000 1,640,000 13,385,000 4,827,000
DEPRECIATION AND AMORTIZATION...... 1,078,000 146,000 2,537,000 407,000
MERGER RELATED EXPENSES............ 1,519,000 250,000 1,596,000 250,000
----------- ----------- ----------- -----------
OPERATING INCOME (LOSS)............ (229,000) 992,000 2,519,000 3,852,000
OTHER INCOME (EXPENSE)
Other income (expense)........... (53,000) 41,000 220,000 157,000
Interest income.................. 21,000 75,000 152,000 187,000
Interest and financing expense... (928,000) (31,000) (2,051,000) (103,000)
----------- ----------- ----------- -----------
Total other income
(expense).............. (960,000) 85,000 (1,679,000) 241,000
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE PROVISION FOR
INCOME TAXES..................... (1,189,000) 1,077,000 840,000 4,093,000
PROVISION FOR INCOME TAXES......... (503,000) (213,000) (1,386,000) (1,270,000)
----------- ----------- ----------- -----------
NET INCOME (LOSS).................. $(1,692,000) $ 864,000 $ (546,000) $ 2,823,000
=========== =========== =========== ===========
EARNINGS (LOSS) PER SHARE:
BASIC.............................. $ (0.20) $ 0.14 $ (0.07) $ 0.46
=========== =========== =========== ===========
DILUTED............................ $ (0.20) $ 0.13 $ (0.07) $ 0.39
=========== =========== =========== ===========
</TABLE>
F-36
<PAGE> 166
WESTOWER CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
JUNE 30, 1999
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK ADDITIONAL OTHER
------------------- PAID-IN RETAINED COMPREHENSIVE COMPREHENSIVE
SHARES AMOUNT CAPITAL EARNINGS INCOME(LOSS) INCOME (LOSS) TOTAL
--------- ------- ----------- ---------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, September 30,
1998.................. 7,047,000 $70,000 $22,610,000 $4,664,000 $(581,000) $26,763,000
Net loss................ (546,000) $(546,000)
Foreign currency
translation
adjustment............ 344,000 344,000
---------
Total comprehensive
loss.............. $(202,000) (202,000)
=========
Proceeds from warrants
and options exercised,
net................... 1,112,000 11,000 8,868,000 8,879,000
Stock issuances for
business
acquisitions.......... 403,000 4,000 8,280,000 8,284,000
Stock compensation
expense............... 60,000 60,000
--------- ------- ----------- ---------- --------- -----------
BALANCE, June 30,
1999.................. 8,562,000 $85,000 $39,818,000 $4,118,000 $(237,000) $43,784,000
========= ======= =========== ========== ========= ===========
</TABLE>
F-37
<PAGE> 167
WESTOWER CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JUNE 30, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
------------ -----------
<S> <C> <C>
CASH FROM OPERATING ACTIVITIES
Net income (loss)......................................... $ (546,000) $ 2,823,000
Adjustments to reconcile net income(loss) to net cash from
operating activities
Depreciation and amortization............................. 2,537,000 407,000
Gain on sale of assets.................................... (125,000)
Non-cash interest and financing expense................... 361,000 142,000
Earnings from equity investment........................... (142,000)
Stock compensation expense................................ 60,000 55,000
Changes in operating assets and liabilities, net of effect
of acquisitions
Accounts receivable....................................... (3,609,000) (646,000)
Costs and estimated earnings in excess of billings on
uncompleted contracts.................................. (1,680,000) (1,138,000)
Inventory and other current assets........................ (1,333,000) (867,000)
Other assets.............................................. 13,000
Trade accounts payable.................................... 647,000 109,000
Billings in excess of costs and estimated earnings on
uncompleted contracts.................................. 151,000 141,000
Other current liabilities................................. (1,023,000) 19,000
Income taxes payable...................................... 334,000 1,280,000
Current and deferred income taxes......................... (18,000) (57,000)
------------ -----------
Net cash flows (used in) provided by operating
activities............................................. (4,261,000) 2,156,000
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for acquisitions, net of cash acquired.......... (6,583,000) (1,474,000)
Increase in other assets.................................. (2,700,000)
Purchases of property and equipment....................... (37,422,000) (1,405,000)
Proceeds from sale of assets.............................. 302,000
------------ -----------
Net cash flows used in investing activities............... (46,705,000) (2,577,000)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock issuances, net........................ 8,878,000 8,934,000
Redemption of preferred stock............................. (150,000)
Proceeds from long-term debt.............................. 1,207,000 15,884,000
Repayments to related parties............................. (2,080,000) (1,972,000)
Repayments from (advances to) related parties............. 696,000 (101,000)
Borrowings (repayments) on line of credit, net............ (1,871,000) (245,000)
Proceeds from credit facility............................. 41,600,000
Distributions to stockholders of acquired subsidiaries
prior to acquisition................................... (2,800,000)
Additions to financing costs.............................. (490,000) (349,000)
Repayments of long-term debt.............................. (2,140,000) (476,000)
------------ -----------
Net cash flow from financing activities................... 45,800,000 18,725,000
------------ -----------
EFFECT OF EXCHANGE RATES.................................... 39,000 28,000
------------ -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ (5,127,000) 18,332,000
CASH AND CASH EQUIVALENTS, beginning of period.............. 9,331,000 1,748,000
------------ -----------
CASH AND CASH EQUIVALENTS, end of period.................... $ 4,204,000 $20,080,000
============ ===========
</TABLE>
F-38
<PAGE> 168
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--BASIS OF PRESENTATION
Westower Corporation (the "Company") designs, builds and maintains wireless
communications transmitting and receiving facilities for providers of wireless
communications services. The Company also owns and leases communications towers.
The Company operates throughout the U.S. and Canada.
The unaudited condensed consolidated financial statements and notes thereto
at June 30, 1999 and September 30, 1998 (audited), and for the three and nine
months ended June 30, 1999 and 1998, reflect the October 28, 1997 merger with
Western Telecom Construction Ltd., an Alberta corporation, the May 29, 1998
merger with MJA Communications Corp., a Florida corporation, and the August 31,
1998 merger with Standby Services, Inc., a Texas corporation. All companies
design, fabricate and construct wireless transmitting and receiving facilities
and shelters for communications providers. The Company issued 835,000 shares of
its common stock for all the common shares of Western Telecom Construction Ltd.,
397,000 shares of its common stock for all of the common shares of MJA
Communications Corp., and 544,000 shares of its common stock for all of the
common shares of Standby Services, Inc. All of these mergers were accounted for
as or similar to a pooling-of-interests.
On October 27, 1998, the Company changed its fiscal year-end from February
28 to September 30. All prior information has been restated to conform with a
September 30 year end.
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial reporting and in accordance with the instructions for Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and disclosures normally required by generally accepted
accounting principles for complete financial statements or those normally
reflected in the Company's Annual Report on Form 10-KSB. The financial
information included herein reflects all adjustments (consisting of normal
recurring adjustments) which are, in the opinion of management, necessary for a
fair presentation of results for interim periods. Results of interim periods are
not necessarily indicative of the results to be expected for a full year. These
unaudited condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements for the seven-month
Transition Period ended September 30, 1998 and the notes thereto included in the
Company's Form 10-KSB.
CONSOLIDATION--The consolidated financial statements include the accounts
of the Company and its wholly owned domestic and Canadian subsidiaries.
Investments in subsidiaries in which the Company exercises significant influence
but which it does not control are accounted for using the equity method.
Investment in a 60% owned affiliated company is accounted for on the equity
method of accounting. The Company's equity (loss) earnings from this investment
during the three and nine months ended June 30, 1999 was $(83,000) and $142,000,
respectively, which has been included in other income. All material intercompany
accounts and transactions have been eliminated in consolidation.
FOREIGN CURRENCY TRANSLATION--All asset and liability accounts of Canadian
operations are translated into U.S. dollars at current exchange rates. Revenues
and expenses are translated using the average exchange rate during the period.
Foreign currency translation adjustments are reported as a component of
comprehensive income and stockholders' equity in the consolidated balance sheet.
Exchange gains and losses from foreign currency transactions are included in
income currently.
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 unaudited
condensed consolidated financial statements. Examples of estimates subject to
possible revision based upon the outcome of future events include costs and
estimated earnings on uncompleted contracts, depreciation of property and
equipment, accrued income tax liabilities, and purchase price allocations for
acquisitions. Actual results could differ from those estimates.
F-39
<PAGE> 169
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
RECLASSIFICATION--Certain prior year amounts have been reclassified to
conform to the current year presentation and did not impact previously reported
stockholders' equity or cash flow.
NOTE 2--INVENTORY
Inventory is stated at the lower of cost and estimated net realizable value
using the first-in, first-out method. Inventory consists of materials purchased
for future construction not associated with specific jobs.
NOTE 3--PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1999 1998
----------- -------------
<S> <C> <C>
Buildings....................................... $ 1,883,000 $ 1,795,000
Vehicles........................................ 4,016,000 2,540,000
Equipment....................................... 2,851,000 1,580,000
Communications towers........................... 37,479,000 1,401,000
Furniture and fixtures.......................... 1,840,000 943,000
Leasehold improvements.......................... 161,000 81,000
Construction in progress........................ 3,534,000
----------- -----------
51,764,000 8,340,000
Less accumulated depreciation and
amortization.................................. (2,878,000) (1,562,000)
----------- -----------
48,886,000 6,778,000
Land............................................ 1,331,000 796,000
----------- -----------
$50,217,000 $ 7,574,000
=========== ===========
</TABLE>
In February 1999, the Company completed the acquisition of certain
communications towers under contract in December 1998, at an aggregate cost of
approximately $17 million. In May 1999, the Company completed the acquisition of
certain communications towers under contract in October 1998, at an aggregate
cost of approximately $15.5 million.
NOTE 4--ACQUISITIONS
During the nine months ended June 30, 1999, the Company consummated the
following transactions which were accounted for under the purchase method of
accounting, and accordingly, the operating results of the acquired entities have
been included in the consolidated operating results since the date of
acquisition.
On October 30, 1998 the Company completed the acquisition of Teletronics
Management Services, Inc. ("Teletronics"). The acquisition was effected by
exchanging approximately 188,000 shares of common stock valued at approximately
$3.8 million, based on the publicly traded price, $1.8 million in cash,
including distributions payable to former shareholders in the amount of
$800,000, and the assumption of certain liabilities, for all outstanding shares
of Teletronics. The acquisition was accounted for using the purchase method for
business combinations resulting in goodwill of approximately $5.0 million.
On November 10, 1998 the Company completed the acquisition of Summit
Communications, LLC ("Summit"), a Mississippi limited liability company which
engages in operations similar to those of the Company. The acquisition was
effected by exchanging approximately 200,000 shares of common stock valued at
approximately $4.1 million, based on the publicly traded price, $4.4 million in
cash, and the
F-40
<PAGE> 170
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
assumption of certain liabilities, for all membership interests in Summit. The
former members of Summit may also receive an additional 100,000 shares of common
stock, based on certain performance criteria during the three years following
the date of acquisition. The acquisition was accounted for using the purchase
method for business combinations resulting in goodwill of approximately $8.0
million.
On February 4, 1999 the Company completed the acquisition of Cypress Real
Estate Services, Inc. ("Cypress"), a Florida corporation. The acquisition was
effected by exchanging approximately 15,000 shares of common stock valued at
approximately $424,000, based on the publicly traded price, for all outstanding
shares of Cypress. The former shareholder of Cypress may also receive additional
shares of common stock, based on the number of towers, not to exceed 1,000
towers, acquired or constructed by the Company, subject to certain limitations
and restrictions.
The acquisition was accounted for using the purchase method for business
combinations with substantially all of the purchase price allocated to goodwill.
On February 26, 1999 the Company completed the acquisition of
Telecommunications R. David ("R. David"), a Quebec, Canada company which engages
in operations similar to those of the Company. The acquisition was effected by
exchanging approximately $330,000 in cash, and the assumption of certain
liabilities, for all outstanding shares of R. David. The acquisition was
accounted for using the purchase method for business combinations resulting in
goodwill of approximately $350,000.
The following is a summary of all consideration exchanged for acquisitions
that were accounted for as purchases:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
JUNE 30,
1999
-----------
<S> <C>
Shares issued......................................... 403,000
Value of shares....................................... $ 8,284,000
Cash.................................................. 6,583,000
-----------
Total purchase price........................ $14,867,000
===========
</TABLE>
The assets and liabilities of the acquired entities were recorded at their
estimated fair market values at the dates of acquisition. The initial
allocations of fair market values are preliminary and are subject to adjustments
during the first year following the acquisition. The initial allocations were as
follows:
<TABLE>
<CAPTION>
JUNE 30,
1999
-----------
<S> <C>
Non-compete agreements.................................. $ 136,000
Tangible assets......................................... 5,084,000
Goodwill................................................ 13,825,000
Liabilities assumed and deferred tax liabilities........ (4,178,000)
-----------
Total purchase price.......................... $14,867,000
===========
</TABLE>
Included in the operating results for the three and nine months ended June
30, 1999 are revenues of $5,273,000 and $14,552,000, respectively, and operating
income of $668,000 and $2,028,000, respectively, from the dates of acquisition.
Goodwill is generally amortized over a 20 year period.
F-41
<PAGE> 171
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 5--INTANGIBLE ASSETS
Intangible assets consist of the following:
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1999 1998
----------- -------------
<S> <C> <C>
Goodwill........................................ $27,864,000 $14,039,000
Communications tower purchase contract.......... -- 5,661,000
Non-compete agreements.......................... 355,000 219,000
----------- -----------
28,219,000 19,919,000
Less accumulated amortization................... (1,227,000) (198,000)
----------- -----------
$26,992,000 $19,721,000
=========== ===========
</TABLE>
NOTE 6--OTHER ASSETS
Other assets consist of the following:
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1999 1998
---------- -------------
<S> <C> <C>
Deposits on tower purchase contracts............. $1,176,000 $ --
Equity investment in joint venture............... 1,189,000 217,000
Other noncurrent assets, net..................... 3,774,000 2,554,000
---------- ----------
$6,139,000 $2,771,000
========== ==========
</TABLE>
During the nine months ended June 30, 1999, the Company paid approximately
$1.2 million as deposits to acquire additional towers. Equity investment in
joint venture represents the Company's cash investment and the Company's equity
earnings from this investment
NOTE 7--LONG-TERM DEBT
During the nine months ended June 30, 1999, the Company borrowed an
aggregate $41.6 million under its credit facility with Bank Boston N.A. As of
June 30, 1999, the effective interest rate on borrowings under the facility was
approximately 7.75%. The Company borrowed an additional $8.0 million under the
facility subsequent to June 30, 1999. The facility is collateralized by
substantially all of the Company's assets. At June 30, 1999, the Company was in
compliance with all of its covenants with the exception of certain financial
ratio requirements related to cash flow. The Company has received a waiver from
the lenders waiving the right to demand repayment as a result of the violation.
NOTE 8--COMMON STOCK
On October 15, 1997, the Company issued 1,200,000 shares of common stock
and 1,380,000 warrants to purchase common stock in a public offering. The
Company received proceeds, net of costs, of $7,493,000 from its public offering.
During the nine months ended June 30, 1999, the Company received net proceeds of
$7,291,000 on the exercise of 819,000 warrants, at $9.00 per share of common
stock. In addition to the warrants noted above, during the nine months ended
June 30, 1999, the Company's underwriters exercised warrants, issued in
connection with the Company's initial public offering, resulting in the Company
receiving $1,123,000 on the exercise of warrants to purchase 162,000 shares of
common stock at $9 per share. At June 30, 1999, there were unexercised warrants
to purchase approximately 79,000 shares of common stock held by underwriters.
F-42
<PAGE> 172
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 9--EARNINGS (LOSS) PER SHARE
The numerators and denominators of basic and fully diluted earnings (loss)
per share are as follows:
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1999 1998 1999 1998
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Numerator--Net income(loss)
as reported............... $(1,692,000) $864,000 $(546,000) $2,823,000
=========== ========= ========== ==========
Denominator--Weighted
average number of shares
outstanding:
Basic weighted average
number of shares....... 8,525,000 6,356,000 8,234,000 6,104,000
Effect of dilutive stock
options and warrants... 431,000 1,104,000
----------- --------- ---------- ----------
Diluted weighted
average number of
shares............... 8,525,000 6,787,000 8,234,000 7,208,000
=========== ========= ========== ==========
</TABLE>
For the three and nine months ended June 30, 1999, all potential common
shares were excluded from the computation of diluted earnings (loss) per share
because inclusion would have had an anti-dilutive effect on earnings (loss) per
share. For the three months ended June 30, 1998, shares associated with
convertible debt were excluded from the computation of diluted earnings per
share because inclusion would have had an anti-dilutive effect on earnings per
share. All other potential common shares have been included in the diluted
earnings per share calculations for the three and nine months ended June 30,
1998.
NOTE 10--SEGMENT INFORMATION
The Company's operations are comprised of a number of communication tower
construction entities that were recently acquired. While management assesses the
operating results of each of these entities separately, as these entities and
its existing operations exhibit similar financial performance and have similar
economic characteristics, they have been aggregated as one segment.
The following table summarizes contract and other revenues and long-lived
assets related to the respective countries in which the Company operates.
<TABLE>
<CAPTION>
AS OF AND FOR THE NINE MONTHS ENDED JUNE 30,
---------------------------------------------
TOTAL UNITED STATES CANADA
----------- ------------- -----------
<S> <C> <C> <C>
1999
Contract and Other Revenues........... $68,455,000 $52,658,000 $15,797,000
Long-lived Assets..................... $50,217,000 $43,574,000 $ 6,643,000
</TABLE>
<TABLE>
<CAPTION>
AS OF AND FOR THE NINE MONTHS ENDED JUNE 30,
---------------------------------------------
TOTAL UNITED STATES CANADA
----------- ------------- -----------
<S> <C> <C> <C>
1998
Contract and Other Revenues........... $35,995,000 $19,206,000 $16,789,000
Long-lived Assets..................... $ 4,854,000 $ 1,251,000 $ 3,603,000
</TABLE>
Long-lived assets are comprised of property and equipment and exclude
intangible assets.
F-43
<PAGE> 173
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 11--MERGER OF THE COMPANY
On May 15, 1999, the Company entered into a definitive agreement with
SpectraSite Holdings, Inc. (SpectraSite), under which Westower will merge with a
subsidiary of SpectraSite. The transaction was consummated on September 2, 1999
and under the terms of the agreement, Westower shareholders received 1.81 shares
of SpectraSite common stock for each Westower share. During the nine months
ended June 30, 1999, the Company incurred approximately $1.5 million in expenses
related to the merger, which included $750,000 paid to the Company's investment
advisors for services in connection with the merger. Under the terms of the
arrangement the Company paid an additional $2,250,000 to its investment advisors
at closing.
F-44
<PAGE> 174
(This page intentionally left blank)
F-45
<PAGE> 175
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
Westower Corporation
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of stockholders' equity, and of cash flows
present fairly, in all material respects, the financial position of Westower
Corporation and its subsidiaries at September 30, 1998, and the results of their
operations and their cash flows for the seven months ended September 30, 1998 in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above. The financial statements of Westower Corporation for the three years in
the period ended February 28, 1998 were audited by other independent accountants
whose report dated April 14, 1998, except for the third paragraph in Note 3, as
to which the date is May 31, 1998 and the fourth paragraph in Note 3, as to
which the date is June 14, 1999, expressed an unqualified opinion on those
statements.
/s/ PricewaterhouseCoopers LLP
Seattle, Washington
February 4, 1999,
except for the fourth
paragraph in Note 3,
as to which the date
is June 17, 1999
F-46
<PAGE> 176
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Westower Corporation
We have audited the accompanying consolidated balance sheets of Westower
Corporation and Subsidiaries as of February 28, 1997 and 1998, and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the three years in the period ended February 28, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of MJA Communications
Corporation, which are included in the financial statements of Westower
Corporation as discussed in Note 3 to the financial statements, and which
statements reflect total assets constituting 56% and 16% of consolidated total
assets as of February 28, 1997 and 1998 and total revenues constituting 22%, 57%
and 33% of consolidated total revenues for each of the three years in the period
ended February 28, 1998, respectively. Those statements were audited by other
auditors, whose report has been furnished to us, and our opinion, insofar as it
relates to the amounts included for MJA Communications Corporation, is based
solely on the report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the reports of other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Westower Corporation
and Subsidiaries as of February 28, 1997 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
February 28, 1998 in conformity with generally accepted accounting principles.
/s/ Moss Adams LLP
Bellingham, Washington
April 14, 1998, except for the third paragraph
in Note 3, as to which the date is
May 31, 1998, and the fourth paragraph in
Note 3, as to which the date is
June 14, 1999
F-47
<PAGE> 177
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholder of
MJA Communications Corp.
Palm Beach Gardens, Florida
We have audited the balance sheet of MJA Communications Corp. as of
December 31, 1996 and 1997, and the related statements of income and retained
earnings, and cash flows for each of the three years in the period ended
December 31, 1997 (not separately presented herein). 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 audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of MJA Communications Corp. as
of December 31, 1996 and 1997, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1997 in
conformity with generally accepted accounting principles.
/s/ Lamn, Krielow, Dytrych & Darling
LAMN, KRIELOW, DYTRYCH & DARLING
Certified Public Accountants
February 11, 1998, except for Note 4, as to which the date is August 12, 1998
F-48
<PAGE> 178
WESTOWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
FEBRUARY 28, 1997 AND 1998 AND SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30,
1997 1998 1998
------------ ------------ -------------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents........................... $ 7,131,000 $ 7,206,000 $ 9,331,000
Accounts receivable, net............................ 4,905,000 7,112,000 13,289,000
Costs and estimated earnings in excess of billings
on uncompleted contracts......................... 938,000 2,143,000 5,078,000
Inventory........................................... 201,000 1,140,000 2,151,000
Related party advances and receivables.............. -- 831,000 956,000
Income tax receivable............................... -- -- 220,000
Other current assets................................ 63,000 125,000 1,203,000
----------- ----------- -----------
Total current assets........................ 13,238,000 18,557,000 32,228,000
Property and equipment, net........................... 2,707,000 4,321,000 7,574,000
Intangible assets, net................................ -- 2,088,000 19,721,000
Other assets.......................................... 58,000 91,000 2,771,000
----------- ----------- -----------
Total assets.......................................... $16,003,000 $25,057,000 $62,294,000
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable.............................. $ 4,980,000 $ 4,445,000 $ 7,053,000
Other current liabilities........................... 275,000 929,000 2,810,000
Billings in excess of costs and estimated earnings
on uncompleted contracts......................... 3,850,000 1,745,000 1,435,000
Income taxes payable................................ 155,000 1,652,000 2,116,000
Deferred income taxes............................... 580,000 534,000 428,000
Stockholder advances and notes payable to related
parties.......................................... 672,000 2,044,000 228,000
Note payable........................................ 208,000 147,000 1,089,000
Current portion of long-term debt and capital lease
obligations...................................... 610,000 502,000 2,419,000
----------- ----------- -----------
Total current liabilities................... 11,330,000 11,998,000 17,578,000
Long-term debt and capital lease obligations,
excluding current portion........................... 212,000 292,000 14,991,000
Deferred income taxes................................. 27,000 48,000 2,962,000
----------- ----------- -----------
Total liabilities........................... 11,569,000 12,338,000 35,531,000
Commitments and contingencies
Minority interest..................................... 40,000 -- --
----------- ----------- -----------
Redeemable preferred stock............................ 450,000 -- --
----------- ----------- -----------
Stockholders' equity
Common stock ($.01 par value, 10,000,000 shares
authorized, 4,776,000, 6,117,000 and 7,047,000
shares issued and outstanding at February 28,
1997 and 1998, and September 30, 1998,
respectively).................................... 48,000 61,000 70,000
Additional paid-in-capital.......................... (48,000) 8,672,000 22,610,00
Accumulated other comprehensive income (loss)....... 27,000 (67,000) (581,000)
Retained earnings................................... 3,917,000 4,053,000 4,664,000
----------- ----------- -----------
Total stockholders' equity.................. 3,944,000 12,719,000 26,763,000
----------- ----------- -----------
Total liabilities and stockholders' equity............ $16,003,000 $25,057,000 $62,294,000
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-49
<PAGE> 179
WESTOWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1997 AND 1998
SEVEN MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED) AND 1998
<TABLE>
<CAPTION>
(UNAUDITED)
SEVEN MONTHS SEVEN MONTHS
YEAR ENDED YEAR ENDED YEAR ENDED ENDED ENDED
FEBRUARY 29, FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30, SEPTEMBER 30,
1996 1997 1998 1997 1998
------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Contract and other revenues
earned............................ $14,775,000 $46,091,000 $41,662,000 $22,869,000 $31,944,000
Costs of revenues earned (exclusive
of depreciation and amortization
shown below)...................... 10,755,000 33,936,000 29,508,000 16,778,000 23,858,000
----------- ----------- ----------- ----------- -----------
Gross profit.................... 4,020,000 12,155,000 12,154,000 6,091,000 8,086,000
Selling, general and administrative
expenses.......................... 2,944,000 7,832,000 7,236,000 2,720,000 4,958,000
Depreciation and amortization....... 196,000 268,000 473,000 187,000 578,000
Merger related expenses............. -- -- -- -- 327,000
----------- ----------- ----------- ----------- -----------
Operating income.................... 880,000 4,055,000 4,445,000 3,184,000 2,223,000
Other income (expense)
Other income (expense).......... (24,000) 32,000 126,000 -- (2,000)
Interest income................. -- 70,000 127,000 41,000 130,000
Interest and financing
expense....................... (110,000) (72,000) (129,000) (32,000) (771,000)
----------- ----------- ----------- ----------- -----------
Total other income
(expense)................ (134,000) 30,000 124,000 9,000 (643,000)
----------- ----------- ----------- ----------- -----------
Income before income taxes and
minority interest................. 746,000 4,085,000 4,569,000 3,193,000 1,580,000
Minority interest................... (6,000) (19,000) -- -- --
----------- ----------- ----------- ----------- -----------
Income before provision for income
taxes............................. 740,000 4,066,000 4,569,000 3,193,000 1,580,000
Provision for income taxes.......... 193,000 636,000 1,633,000 1,141,000 351,000
----------- ----------- ----------- ----------- -----------
Net income.......................... $ 547,000 $ 3,430,000 $ 2,936,000 $ 2,052,000 $ 1,229,000
=========== =========== =========== =========== ===========
Earnings per share:
Basic............................... $ 0.11 $ 0.72 $ 0.56 $ 0.43 $ 0.19
=========== =========== =========== =========== ===========
Diluted............................. $ 0.11 $ 0.72 $ 0.52 $ 0.43 $ 0.16
=========== =========== =========== =========== ===========
Proforma earnings per share:
Basic............................... $ 0.11 $ 0.53 $ 0.53 $ 0.37 $ 0.12
=========== =========== =========== =========== ===========
Diluted............................. $ 0.11 $ 0.53 $ 0.50 $ 0.37 $ 0.10
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-50
<PAGE> 180
WESTOWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1997 AND 1998
SEVEN MONTHS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK ADDITIONAL OTHER
-------------------- PAID-IN RETAINED COMPREHENSIVE COMPREHENSIVE
SHARES AMOUNT CAPITAL EARNINGS INCOME (LOSS) INCOME TOTAL
--------- -------- ----------- ----------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, February 28, 1995....... 4,776,000 $48,000 $ (48,000) $ 362,000 $ 29,000 $ 391,000
Net income....................... 547,000 $ 547,000
Foreign currency translation
adjustment..................... -- -- -- -- -- -- --
----------
Total comprehensive income... $ 547,000 547,000
==========
Distributions of earnings to S
corporation stockholders of
acquired subsidiary prior to
acquisition.................... -- -- -- (39,000) -- (39,000)
--------- ------- ----------- ----------- --------- -----------
BALANCE, February 29, 1996....... 4,776,000 48,000 (48,000) 870,000 29,000 899,000
Net income....................... -- -- -- 3,430,000 -- $3,430,000
Foreign currency translation
adjustment..................... -- -- -- -- (2,000) (2,000)
----------
Total comprehensive income... $3,428,000 3,428,000
==========
Distributions of earnings to S
corporation stockholders of
acquired subsidiary prior to
acquisition.................... -- -- -- (383,000) -- (383,000)
--------- ------- ----------- ----------- --------- -----------
BALANCE, February 28, 1997....... 4,776,000 48,000 (48,000) 3,917,000 27,000 3,944,000
Net income....................... -- -- -- 2,936,000 -- $2,936,000
Foreign currency translation
adjustment..................... -- -- -- -- (94,000) (94,000)
----------
Total comprehensive income... $2,842,000 2,842,000
==========
Stock issuances.................. 1,341,000 13,000 8,699,000 -- -- 8,712,000
Stock compensation expense....... -- -- 21,000 -- -- 21,000
Distributions of earnings to S
corporation stockholders of
acquired subsidiary prior to
acquisition.................... -- -- -- (2,800,000) -- (2,800,000)
--------- ------- ----------- ----------- --------- -----------
BALANCE, February 28, 1998....... 6,117,000 61,000 8,672,000 4,053,000 (67,000) $12,719,000
Net income....................... -- -- -- 1,229,000 -- $1,229,000
Foreign currency translation
adjustment..................... -- -- -- -- (514,000) (514,000)
----------
Total comprehensive income... $ 715,000 715,000
==========
Adjustment to conform fiscal year
ends of acquired
subsidiaries................... -- -- -- 438,000 -- 438,000
Proceeds from warrants
exercised...................... 559,000 6,000 4,782,000 -- -- 4,788,000
Proceeds from stock options
exercised and related tax
benefit........................ 35,000 -- 556,000 -- -- 556,000
Stock issuances for business
acquisitions................... 336,000 3,000 8,097,000 -- -- 8,100,000
Value ascribed to conversion
feature and warrants of
convertible debt, net of
deferred taxes................. -- -- 468,000 -- -- 468,000
Stock compensation expense....... -- -- 35,000 -- -- 35,000
Distributions of earnings and for
taxes to stockholders of
acquired subsidiaries prior to
acquisition.................... -- -- -- (1,056,000) -- (1,056,000)
--------- ------- ----------- ----------- --------- -----------
BALANCE, September 30, 1998...... 7,047,000 $70,000 $22,610,000 $ 4,664,000 $(581,000) $26,763,000
========= ======= =========== =========== ========= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-51
<PAGE> 181
WESTOWER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1997 AND 1998
SEVEN MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED) AND 1998
<TABLE>
<CAPTION>
(UNAUDITED)
SEVEN MONTHS SEVEN MONTHS
YEAR ENDED YEAR ENDED YEAR ENDED ENDED ENDED
FEBRUARY 29, FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30, SEPTEMBER 30,
1996 1997 1998 1997 1998
------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.................................... $ 547,000 $ 3,430,000 $ 2,936,000 $ 2,052,000 $ 1,229,000
Adjustments to reconcile net income to net cash
from operating activities
Depreciation and amortization................. 196,000 268,000 473,000 187,000 578,000
Provision for bad debt........................ -- -- -- -- 221,000
Deferred income taxes......................... 96,000 433,000 (41,000) (209,000) 367,000
Non-cash interest and financing expense....... -- -- -- -- 264,000
Gain on sale of assets........................ -- -- (125,000) -- --
Stock-based compensation...................... -- -- 56,000 -- 35,000
Earnings from equity investment............... -- -- -- -- (46,000)
Minority interest............................. 6,000 19,000 -- (40,000) --
Changes in operating assets and liabilities, net
of effect of acquisitions
Accounts receivable........................... (2,570,000) (1,402,000) (1,484,000) (1,962,000) (1,603,000)
Costs and estimated earnings in excess of
billings on uncompleted contracts........... (284,000) (545,000) (1,200,000) (238,000) (1,350,000)
Inventory and other current assets............ (69,000) (143,000) (938,000) -- (990,000)
Other assets.................................. (32,000) (93,000) (5,000) (597,000) 135,000
Trade accounts payable........................ 1,163,000 3,387,000 (933,000) (810,000) (2,265,000)
Billings in excess of costs and estimated
earnings on uncompleted contracts........... 1,464,000 2,380,000 (2,105,000) (3,156,000) (963,000)
Other current liabilities..................... 56,000 79,000 648,000 (198,000) 6,000
Income taxes payable.......................... (44,000) 147,000 1,354,000 (155,000) 244,000
----------- ----------- ----------- ----------- -----------
Net cash flows (used) provided by
operating activities.................. 529,000 7,960,000 (1,364,000) (5,126,000) (4,138,000)
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for acquisitions, net of cash
acquired.................................... -- -- (1,467,000) -- (6,348,000)
Sales of property and equipment............... 155,000 -- 444,000 -- --
Purchases of property and equipment........... (301,000) (1,245,000) (1,692,000) (455,000) (1,657,000)
----------- ----------- ----------- ----------- -----------
Net cash flows used by investing
activities............................ (146,000) (1,245,000) (2,715,000) (455,000) (8,005,000)
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock issuances, net............ -- -- 7,493,000 -- --
Proceeds from stock warrant and option
exercises, net.............................. -- -- -- -- 5,002,000
Redemption of preferred stock................. -- -- (450,000) (300,000) --
Principal payments on long-term debt.......... (583,000) (389,000) (326,000) (227,000) (392,000)
Distributions to stockholders................. (39,000) (383,000) (2,800,000) -- (1,056,000)
Advances to related parties................... -- -- (196,000) (384,000) (65,000)
Advances from related parties................. 481,000 -- 457,000 1,117,000 34,000
Repayments to related parties................. (17,000) (480,000) -- -- (1,816,000)
Borrowing (repayments) on line of credit,
net......................................... -- 207,000 (57,000) (85,000) (88,000)
Additions to financing costs.................. -- -- -- -- (2,368,000)
Proceeds from debt incurred................... 159,000 555,000 104,000 104,000 15,256,000
----------- ----------- ----------- ----------- -----------
Net cash flows provided (used) by
financing activities.................. 1,000 (490,000) 4,225,000 225,000 14,507,000
----------- ----------- ----------- ----------- -----------
EFFECT OF CHANGES IN EXCHANGE RATES............. -- -- (71,000) (27,000) (239,000)
----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH................. 384,000 6,225,000 75,000 (5,383,000) 2,125,000
CASH AND CASH EQUIVALENTS, beginning of
period........................................ 522,000 906,000 7,131,000 7,131,000 7,206,000
----------- ----------- ----------- ----------- -----------
CASH AND CASH EQUIVALENTS, end of period........ $ 906,000 $ 7,131,000 $ 7,206,000 $ 1,748,000 $ 9,331,000
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-52
<PAGE> 182
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- ORGANIZATION
Westower Corporation (the "Company") was incorporated in Washington state
in June 1997 for the purpose of acquiring Westower Holdings Ltd. and its
wholly-owned subsidiaries, Westower Communications Ltd. and Westower
Communications, Inc. In connection with an initial public offering on October
15, 1997, the Company raised approximately $7.5 million in net cash proceeds.
Proceeds have been used in part to acquire the assets and operations of other
businesses.
The Company is successor to operations begun in 1990 by Westower
Communication Ltd. It designs, builds and maintains wireless communication
transmitting and receiving facilities for providers of wireless communication
services. The Company also owns and leases wireless communication towers to
wireless communication providers. Principal operations are located in the
Pacific Northwest, including the Canadian provinces of British Columbia and
Alberta, and the Southeastern and Southwestern United States. Other operations
extend throughout the Western United States and into Eastern Canada.
On October 27, 1998, the Company changed its fiscal year-end from February
28 to September 30 resulting in a seven month reporting period from March 1,
1998 to September 30, 1998 (the "Transition Period").
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Consolidation -- The consolidated financial statements include the
accounts of Westower Corporation and its wholly owned domestic and Canadian
subsidiaries.
Investments in subsidiaries in which the Company exercises significant
influence but which it does not control are accounted for using the equity
method. At September 30, 1998, the Company has an equity investment in a joint
venture which engages in operations in Brazil that are similar to those of the
Company, in which it has an economic ownership interest of 60 percent. Revenues
and associated expenses are transacted in Canadian dollars. As of September 30,
1998, the Company's investment totaled $217,000, which has been included in
other assets, and the Company's equity earnings from this investment during the
Transition Period totaled $46,000, which has been included in contract and other
revenues earned.
All material intercompany accounts and transactions have been eliminated in
consolidation.
(b) 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
consolidated financial statements. Examples of estimates subject to possible
revision based upon the outcome of future events include costs and estimated
earnings on uncompleted contracts, depreciation of property and equipment,
accrued income tax liabilities, and purchase price allocations for acquisitions.
Actual results could differ from those estimates.
(c) Contract and Other Revenue and Cost Recognition -- Revenue from
fixed-price construction contracts is recognized using the
percentage-of-completion method based on cost incurred to total estimated cost.
Revenue from contracts based upon time and materials is recognized based upon
hours worked and materials consumed. Most of the Company's contracts are
short-term and are completed in two to three months. Contract costs include all
direct material and labor costs and those indirect costs related to contract
performance. Provisions for estimated losses on uncompleted contracts are made
in the period in which such losses are determined.
Costs and estimated earnings in excess of billings on uncompleted contracts
represents revenues recognized in excess of amounts billed. Billings in excess
of costs and estimated earnings on uncompleted contracts represents billings in
excess of revenues earned.
F-53
<PAGE> 183
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
The Company owns wireless communication towers which it leases to third
parties. Revenues are recognized on a monthly basis over the term of the leasing
agreement. Revenues and cost of services of approximately $170,000 and $25,000,
respectively, have been included in contract and other revenues earned and cost
of revenues earned, respectively, in the Transition Period.
(d) Cash and Cash Equivalents -- Cash and cash equivalents consist of cash
in banks and money market investments on deposit with major Canadian and U.S.
financial institutions. Investments with maturities of three months or less when
purchased are considered cash equivalents.
(e) Inventory -- Inventory consists of construction parts and supplies and
is stated at the lower of cost or market. Cost is determined using the first-in,
first-out (FIFO) method.
(f) Property and Equipment -- Property and equipment is recorded at cost.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets. Estimated useful lives by major asset category are
as follows: buildings -- 10-25 years; furniture, fixtures and equipment -- 3 to
10 years; wireless communication towers -- 20 years; vehicles -- 5 years. Gains
or losses on the dispositions of assets are recorded at the time of disposition.
The costs of normal repairs and maintenance are charged to expense as incurred.
(g) Capitalized Software -- Purchased software is capitalized at cost and
amortized over its estimated useful life of 3 years.
(h) Intangible Assets -- Business acquisition costs are allocated to the
tangible and identifiable intangible assets that are acquired. Business
acquisition costs allocated to contracts to purchase wireless communication
towers are amortized over a 20 year period upon acquisition of the wireless
communication towers, and costs allocated to non-compete agreements are
amortized over the term of the agreements, which are generally 5 years. The
excess of the aggregate purchase price over the fair value of the net assets
acquired and identifiable intangible assets acquired is recorded as goodwill.
Goodwill is amortized over a 20 year period. The Company amortizes its
intangible assets using the straight line method.
(i) Financing Costs -- Direct costs associated with obtaining debt
financing are deferred and are amortized over the term of the debt using the
effective interest method. Direct costs of obtaining commitments for financing
are deferred and charged to expense over the term of the commitments. Direct
costs associated with obtaining equity financing are charged to additional
paid-in capital as the related funds are raised. Deferred financing costs
totaled $2.4 million at September 30, 1998, which has been included in other
assets. Accumulated amortization of deferred financing costs totaled $113,000 at
September 30, 1998.
(j) Valuation of Long-Lived Assets -- The Company periodically reviews its
long-lived assets and certain identifiable intangible assets, including
goodwill, whenever events or changes in circumstance indicate that the carrying
amount of an asset may be impaired and not recoverable. Adjustments are made if
the sum of the expected future undiscounted operating cash flows is less than
the carrying value of the asset.
(k) Income Taxes -- The Company accounts for income taxes under the
liability method. Deferred taxes are recognized for temporary differences
between the basis of assets and liabilities for financial statement and income
tax purposes at the enacted tax rates. The significant differences relate
primarily to the timing and recognition of depreciation and amortization of
long-lived assets, profit on uncompleted contracts, amortization of financing
costs and bad debt expense. Deferred tax amounts represent the future tax
consequences of those differences, which will either be deductible or taxable
when the assets and liabilities are recovered or settled. Valuation allowances
are established, when necessary, to reduce deferred tax assets to the amounts
expected to be realized. The Company files a consolidated federal income tax
F-54
<PAGE> 184
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
return in the United States. The Company files separate tax returns for each of
its Canadian subsidiaries in Canada. Additionally, certain of the Company's
operations are subject to Provincial income taxes in Canada and state income
taxes in the United States.
(l) Foreign Currency Translation -- All asset and liability accounts of
Canadian operations are translated into U.S. dollars at current exchange rates.
Revenues and expenses are translated using the average exchange rate during the
period. Foreign currency translation adjustments are reported as a component of
comprehensive income and stockholders' equity in the consolidated balance sheet.
Gains and losses resulting from foreign currency transactions are included in
income currently.
(m) Earnings Per Share and Change in Accounting Policy -- During fiscal
year ended February 28, 1998, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 128, Earnings Per Share. The new standard
supersedes Accounting Principles Board (APB) No. 15, Earnings Per Share and
establishes standards for computing and presenting earnings per share. Prior
years have been restated to conform with the new requirements.
Basic earnings per share amounts are computed based on the weighted average
number of shares outstanding during the period after giving retroactive effect
to stock dividends and stock splits. Diluted earnings per share amounts are
computed by determining the number of additional shares that are deemed
outstanding from stock options and warrants, using the treasury stock method,
and convertible debentures.
(n) Segment Information -- In the Transition Period, the Company adopted
SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information. SFAS No. 131 supersedes SFAS 14, Financial Reporting for Segments
of a Business Enterprise, replacing the "industry segment" approach with the
"management" approach. The management approach designates the internal
organization that is used by management for making operating decisions and
assessing performance as the source of the Company's reportable segments. SFAS
No. 131 also requires disclosures about products and services, geographic areas,
and major customers. The adoption of SFAS No. 131 did not significantly affect
the disclosure of segment information previously reported (see "Segment
Information" note).
(o) New Accounting Standards -- In June 1997, the Financial Accounting
Standards Board issued SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities. Among other provisions, SFAS No. 133 requires that entities
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. Gains and losses
resulting from changes in the fair values of those derivatives would be
accounted for depending on the use of the derivative and whether it qualifies
for hedge accounting. This Statement becomes effective beginning June 15, 2000,
for the Company. The Company is currently assessing the impact, if any, to its
financial position or results of operations.
(p) Interim Financial Data (Unaudited) -- As discussed in Note 1, on
October 27, 1998 the Company changed its fiscal year end to September 30 from
February 28. The information presented for the seven months ended September 30,
1997 is unaudited. The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with Rule 10-01 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments necessary for a fair presentation of results of
the interim period have been made and such adjustments were of a normal and
recurring nature. The results of operations and cash flows for the seven months
ended September 30, 1997 are not necessarily indicative of the results that were
reported for the entire fiscal year ending February 28, 1998.
F-55
<PAGE> 185
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 3 -- MERGERS AND ACQUISITIONS
MERGERS
Westower Holdings Ltd.
Concurrent with its incorporation in June 1997, the Company completed a
merger with Westower Holdings Ltd. by issuing 3,000,000 shares of common stock
in exchange for all outstanding common stock of Westower Holdings Ltd. Westower
Holdings Ltd. is a Wyoming corporation that owns all outstanding common stock of
Westower Communications Ltd. and Westower Communications, Inc. The merger
qualified as a tax-free exchange and is accounted for similar to a
pooling-of-interests.
WTC Holdings, Inc. and Western Telecom Construction Ltd
Effective October 28, 1997, the Company completed a merger with WTC
Holdings, Inc. (formerly 411677 Alberta Ltd.) and its wholly owned subsidiary,
Western Telecom Construction Ltd., (collectively, "Western Telecom"). WTC
Holdings, Inc. was wholly-owned by a relative of a significant stockholder and a
director of Westower Corporation. WTC Holdings, Inc. is a Wyoming corporation,
and Western Telecom Construction Ltd. is a Canadian corporation. Western Telecom
engages in operations similar to those of the Company. The merger was effected
by exchanging 835,000 shares of common stock for all outstanding common stock of
Western Telecom. The merger qualified as a tax-free exchange and has been
accounted for using the pooling-of-interests method for business combinations.
Accordingly, the consolidated financial statements for the fiscal years ended
February 29, 1996 and February 28, 1997 and 1998 and the Transition Period have
been restated to include the combined financial position, results of operations,
and cash flows of Western Telecom.
MJA Communications Corporation
Effective May 31, 1998, the Company completed a merger with MJA
Communications Corporation ("MJA"). MJA is a Florida corporation which engages
in operations similar to those of the Company. In connection with the merger,
MJA's tax status was changed from an S corporation to a C corporation. The
merger was effected by exchanging 397,000 shares of common stock for all
outstanding common stock of MJA. The merger qualified as a tax-free exchange and
has been accounted for using the pooling-of-interests method for business
combinations. Accordingly, the consolidated financial statements for the fiscal
years ended February 29, 1996 and February 28, 1997 and 1998 and the Transition
Period have been restated to include the combined financial position, results of
operations, and cash flows of MJA.
Standby Services, Inc.
Effective August 31, 1998, the Company completed a merger with Standby
Services, Inc. ("Standby"). Standby is a Texas corporation which engages in
operations similar to those of the Company. In connection with the merger,
Standby's tax status was changed from an S corporation to a C corporation. The
merger was effected by exchanging 544,000 shares of common stock for all
outstanding common stock of Standby. The merger qualified as a tax-free exchange
and has been accounted for using the pooling-of-interests method for business
combinations. Accordingly, the consolidated financial statements for the fiscal
years ended February 29, 1996 and February 28, 1997 and 1998 and the Transition
Period have been restated to include the combined financial position, results of
operations, and cash flows of Standby.
Prior to the respective mergers, Western Telecom had a fiscal year-end of
January 31 and MJA and Standby had a fiscal year end of December 31. In
recording the business combinations, the fiscal years ended 1998 and 1997
financial statements have not been restated to conform with Westower
Corporation's previous fiscal year end of February 28, as the effect on the
consolidated financial statements is not
F-56
<PAGE> 186
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 3 -- MERGERS AND ACQUISITIONS -- (CONTINUED)
material. As a result of Western Telecom, MJA and Standby having a different
fiscal year end and the change in the Company's fiscal year end, Western Telecom
and MJA and Standby's results of operations for the respective one and two-month
periods ended February 28, 1998 have been excluded from the reported results of
operations in the Transition Period and, therefore, have been presented as an
adjustment to the Company's consolidated statement of stockholders' equity for
the Transition Period. Aggregate revenues, expenses, income before extraordinary
items and net income, attributable to these mergers, which have been excluded
from the Company's reported results of operations in the Transition Period, were
$3,302,000, $2,864,000, $438,000 and $438,000, respectively, for the period from
January 1, 1998 to February 28, 1998.
Summarized results of operations for the separate companies and combined
amounts included in the consolidated financial statements, net of intercompany
transactions, are as follows:
<TABLE>
<CAPTION>
(UNAUDITED)
SEVEN MONTHS SEVEN MONTHS
YEAR ENDED YEAR ENDED YEAR ENDED ENDED ENDED
FEBRUARY 29, FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30, SEPTEMBER 30,
1996 1997 1998 1997 1998
------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Contract and other revenues
earned
Westower Corporation and
Subsidiaries, including
entities acquired........ $ 5,664,000 $10,415,000 $16,156,000 $ 8,652,000 $11,450,000
MJA......................... 3,305,000 26,164,000 13,929,000 8,418,000 10,824,000
Western Telecom............. 1,777,000 5,001,000 7,027,000 3,035,000 5,341,000
Standby..................... 4,029,000 4,511,000 4,550,000 2,764,000 4,329,000
----------- ----------- ----------- ----------- -----------
$14,775,000 $46,091,000 $41,662,000 $22,869,000 $31,944,000
=========== =========== =========== =========== ===========
Net income (loss)
Westower Corporation and
Subsidiaries, including
entities acquired........ $ 460,000 $ 815,000 $ 975,000 $ 784,000 $ (816,000)
MJA......................... (3,000) 2,617,000 527,000 195,000 513,000
Western Telecom............. (5,000) 364,000 1,475,000 442,000 387,000
Standby..................... 95,000 (366,000) (41,000) 631,000 1,145,000
----------- ----------- ----------- ----------- -----------
$ 547,000 $ 3,430,000 $ 2,936,000 $ 2,052,000 $ 1,229,000
=========== =========== =========== =========== ===========
</TABLE>
F-57
<PAGE> 187
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 3 -- MERGERS AND ACQUISITIONS -- (CONTINUED)
The following pro forma net income and basic diluted earnings per share are
presented as if the Company had been required to provide for income taxes that
were previously taxable to the former shareholders of the merged entities that
were previously S corporations.
<TABLE>
<CAPTION>
(UNAUDITED)
SEVEN MONTHS SEVEN MONTHS
YEAR ENDED YEAR ENDED YEAR ENDED ENDED ENDED
FEBRUARY 29, FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30, SEPTEMBER 30,
1996 1997 1998 1997 1998
------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Net income as reported............ $547,000 $3,430,000 $2,936,000 $2,052,000 $1,229,000
Dividends on preferred shares... (39,000) -- -- -- --
Pro forma adjustment for income
taxes of acquired entities
previously filing as S
corporations................. 1,000 (890,000) (165,000) (281,000) (454,000)
-------- ---------- ---------- ---------- ----------
Pro forma net income.............. $509,000 $2,540,000 $2,771,000 $1,771,000 $ 775,000
======== ========== ========== ========== ==========
Pro forma basic earnings per share $ 0.11 $ 0.53 $ 0.53 $ 0.37 $ 0.12
======== ========== ========== ========== ==========
Pro forma diluted earnings per
share........................... $ 0.11 $ 0.53 $ 0.50 $ 0.37 $ 0.10
======== ========== ========== ========== ==========
</TABLE>
ACQUISITIONS
The following acquisitions have been accounted for using the purchase
method of accounting for business combinations and, accordingly, the operating
results of the acquired companies have been included in the Company's
consolidated financial statements from the date of acquisition.
Acquisitions from November 1, 1997 to February 28, 1998
On dates ranging between November 1, 1997 and January 17, 1998, the Company
acquired all outstanding shares of common stock of National Tower Service Ltd.,
501053 B.C. Ltd., and the minority interest in WTC Leasing Ltd. which are
Canadian corporations with operations similar to those of the Company.
Additionally, on January 17, 1998 the Company acquired the assets, principally
communication towers, of Ralph's Radio, Inc. and 344813 Alberta Ltd. The
aggregate purchase price of these transactions totaled approximately $2.7
million which consisted of $1.5 million in cash and the issuance of 134,000
shares of common stock valued at approximately $1.2 million, based on the
publicly traded price.
Jovin Communications, Inc. and Acier Filteau, Inc.
On June 12, 1998 the Company completed the acquisitions of Jovin
Communications, Inc. ("Jovin") and Acier Filteau, Inc. ("Acier"), both Montreal,
Quebec (Canada) corporations which engage in operations similar to those of the
Company. The acquisitions were effected by exchanging shares of common stock of
the Company and shares of a separate class of common stock of an acquisition
subsidiary, with rights identical to those of the Company's common stock,
aggregating 118,000 shares in total and valued at approximately $2.8 million,
based on the publicly traded price, and the assumption of certain obligations of
Jovin and Acier, for all outstanding common shares of Jovin and Acier.
Cord Communications, Incorporated
On August 31, 1998 the Company completed the acquisition of Cord
Communications Incorporated ("Cord"), a California corporation which engages in
operations similar to those of the Company. The acquisition was effected by
exchanging 218,000 shares of common stock valued at approximately
F-58
<PAGE> 188
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 3 -- MERGERS AND ACQUISITIONS -- (CONTINUED)
$5.2 million, based on the publicly traded price, $5 million in cash and the
assumption of certain obligations of Cord for all outstanding common shares of
Cord. The former stockholders of Cord may also receive an additional 348,000
shares of common stock, based on the attainment of certain performance measures
of Cord during the twelve month period following the date of acquisition.
Additional shares of common stock will be recorded as an adjustment of the
purchase price and will increase recorded goodwill.
CNG Communications, Inc.
On September 28, 1998, the Company completed the acquisition of CNG
Communications, Inc. ("CNG") for approximately $1.7 million in cash and the
assumption of certain obligations of CNG. The former shareholder of CNG may also
receive up to an additional $3 million in cash pending the successful
acquisition of certain wireless communication towers under an existing contract
held by CNG. As part of the acquisition, the Company assumed certain liabilities
of CNG, including convertible debentures, outstanding warrants and the
termination costs relating to a financing agreement with a third party
investment banker. The Company entered into a settlement agreement with the
above parties that resulted in an aggregate payment of $3.25 million to the
convertible debenture holders, which included principal and interest, and the
third party investment banker. On October 22, 1998, the Company exercised its
right to acquire the wireless communication towers under contract at an exercise
price of $9.2 million. The consummation of the acquisition is subject to
regulatory approval.
The following is a summary of all consideration exchanged for acquisitions
that were accounted for as purchases:
<TABLE>
<CAPTION>
SEVEN MONTHS
YEAR ENDED ENDED
FEBRUARY 28, SEPTEMBER 30,
1998 1998
------------ -------------
<S> <C> <C>
Shares issued............................................... 134,000 336,000
Value of shares............................................. $1,184,000 $ 8,100,000
Cash........................................................ 1,467,000 6,672,000
---------- -----------
Total purchase price........................................ $2,651,000 $14,772,000
========== ===========
</TABLE>
The assets and liabilities of the acquired entities were recorded at their
estimated fair market values at the dates of acquisition. The initial
allocations of fair market values are preliminary subject to adjustments during
the first year following the acquisition. The initial allocations were as
follows:
<TABLE>
<CAPTION>
SEVEN MONTHS
YEAR ENDED ENDED
FEBRUARY 28, SEPTEMBER 30,
1998 1998
------------ -------------
<S> <C> <C>
Non-compete agreements..................................... $ -- $ 219,000
Tangible assets............................................ 1,437,000 11,034,000
Communication tower purchase contracts..................... -- 5,661,000
Goodwill................................................... 2,104,000 12,507,000
Liabilities assumed and deferred tax liabilities........... (890,000) (14,649,000)
---------- ------------
Total purchase price....................................... $2,651,000 $ 14,772,000
========== ============
</TABLE>
The results of operations of these businesses have been included in the
Company's consolidated financial statements from their respective acquisition
dates. The following summarizes the unaudited pro forma results of operations,
on a combined basis, as if the acquisitions had been consummated as of the
F-59
<PAGE> 189
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 3 -- MERGERS AND ACQUISITIONS -- (CONTINUED)
beginning of each of the periods presented, after including the impact of
certain adjustments such as amortization of intangible assets and income tax
effects:
<TABLE>
<CAPTION>
(UNAUDITED)
(UNAUDITED) SEVEN MONTHS
YEAR ENDED ENDED
FEBRUARY 28, SEPTEMBER 30,
1998 1998
------------ -------------
<S> <C> <C>
Contract and other revenues earned......................... $72,720,000 $43,273,000
Pro forma net income....................................... $ 4,323,000 $ 140,000
Pro forma basic earnings per share......................... $0.82 $0.02
Pro forma diluted earnings per share....................... $0.77 $0.02
</TABLE>
The unaudited pro forma results are not necessarily indicative of the
results of operations which would actually have been reported had the
acquisitions had been completed prior to the beginning of the periods presented.
In addition, they are not intended to be indicative of future results.
NOTE 4 -- UNCOMPLETED CONTRACTS
Costs, estimated earnings and billings on uncompleted contracts are
summarized as follows:
<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30,
1997 1998 1998
------------ ------------ -------------
<S> <C> <C> <C>
Costs incurred on uncompleted contracts.... $ 15,356,000 $ 12,111,000 $ 15,461,000
Estimated earnings......................... 3,516,000 5,084,000 3,212,000
Less billings to date...................... (21,784,000) (16,797,000) (15,030,000)
------------ ------------ ------------
Total...................................... $ (2,912,000) $ 398,000 $ 3,643,000
============ ============ ============
Presentation in the accompanying balance
sheet:
Costs and estimated earnings in excess of
billings on uncompleted contracts..... $ 938,000 $ 2,143,000 $ 5,078,000
Billings in excess of costs and estimated
earnings on uncompleted contracts..... (3,850,000) (1,745,000) (1,435,000)
------------ ------------ ------------
Total...................................... $ (2,912,000) $ 398,000 $ 3,643,000
============ ============ ============
</TABLE>
F-60
<PAGE> 190
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 5 -- PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30,
1997 1998 1998
------------ ------------ -------------
<S> <C> <C> <C>
Buildings...................................... $ 550,000 $ 1,507,000 $ 1,795,000
Vehicles....................................... 737,000 1,497,000 2,540,000
Equipment...................................... 381,000 743,000 1,580,000
Communication towers........................... 387,000 620,000 1,401,000
Furniture and fixtures......................... 380,000 634,000 943,000
Leasehold improvements......................... 27,000 73,000 81,000
---------- ----------- -----------
2,462,000 5,074,000 8,340,000
Less accumulated depreciation.................. (688,000) (1,458,000) (1,562,000)
---------- ----------- -----------
1,774,000 3,616,000 6,778,000
Land........................................... 933,000 705,000 796,000
---------- ----------- -----------
$2,707,000 $ 4,321,000 $ 7,574,000
========== =========== ===========
</TABLE>
Depreciation expense on property and equipment in the fiscal years ended
February 29, 1996 and February 28, 1997 and 1998 and the Transition Period was
$196,000, $262,000, $457,000 and $396,000, respectively.
NOTE 6 -- INTANGIBLE ASSETS
Intangible assets consist of the following:
<TABLE>
<CAPTION>
FEBRUARY 28, SEPTEMBER 30,
1998 1998
------------ -------------
<S> <C> <C>
Goodwill.................................................... $2,104,000 $14,039,000
Communication tower purchase contracts...................... -- 5,661,000
Non-compete agreements...................................... -- 219,000
---------- -----------
2,104,000 19,919,000
Less accumulated amortization............................... (16,000) (198,000)
---------- -----------
$2,088,000 $19,721,000
========== ===========
</TABLE>
Amortization expense on intangible assets in the fiscal years ended
February 29, 1996, February 28, 1997 and 1998 and the Transition Period was
$0.00, $8,000, $16,000 and $182,000, respectively.
NOTE 7 -- NOTES PAYABLE
Note Payable to Finance Company
At September 30, 1998, through one of its acquired subsidiaries, the
Company had a $2.5 million line of credit facility with a finance company,
secured by accounts receivable, inventory, property and equipment, cash and cash
equivalents. At September 30, 1998 the outstanding balance was $1.09 million,
which was repaid in October 1998, and the line of credit was cancelled.
F-61
<PAGE> 191
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 7 -- NOTES PAYABLE -- (CONTINUED)
Notes Payable to Bank
At February 28, 1998 the Company had a line of credit facility with a
Canadian bank that allowed for borrowings at the bank's prime rate plus .75%.
The line was collateralized by essentially all assets of Western Telecom
Construction Ltd. and was cancelled in May 1998.
NOTE 8 -- LONG TERM DEBT AND CAPITAL LEASE OBLIGATIONS
Long-term debt and capital lease obligations consists of the following:
<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30,
1997 1998 1998
------------ ------------ -------------
<S> <C> <C> <C>
Convertible note, interest at 7%, due April 30,
2007, quarterly interest payments through April
2005, quarterly reductions thereafter, see
further description below...................... $ -- $ -- $14,154,000
Convertible notes of acquired subsidiary,
interest at rates ranging from 12% to 14%,
repaid in December 1998 (see Note 3)........... -- -- 1,882,000
Notes payable to various Canadian banks repaid in
full during the Transition Period and 1998, due
on demand or in aggregate monthly installments
of $8,200 including interest, collateralized by
assets and an assignment of lease revenue...... 480,000 263,000 --
Notes payable to various U.S. and Canadian Banks,
repaid in full during the transition period,
due in aggregate monthly installments of
$7,800, including interest at rates ranging
from 7.5% to 11.25% through June 2002,
collateralized by property, plant and
equipment...................................... 222,000 129,000 --
Vehicle purchase contracts and other notes
payable with U.S. and Canadian finance
corporations, aggregate monthly installments of
$30,000, including interest at rates up to
11.15%, payments due through December 2001,
collateralized by vehicles and real property... 86,000 192,000 781,000
Capital lease obligations to U.S. and Canadian
lessors, due in aggregate monthly installments
of $19,000 through August 2003, collateralized
by leased equipment............................ 34,000 210,000 593,000
--------- --------- -----------
Total debt....................................... 822,000 794,000 17,410,000
Less current portion............................. (610,000) (502,000) (2,419,000)
--------- --------- -----------
Long-term portion................................ $ 212,000 $ 292,000 $14,991,000
========= ========= ===========
</TABLE>
F-62
<PAGE> 192
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 8 -- LONG TERM DEBT AND CAPITAL LEASE OBLIGATIONS -- (CONTINUED)
Long-term debt and capital lease obligations matures as follows:
<TABLE>
<CAPTION>
YEAR ENDING
SEPTEMBER 30,
-------------
<S> <C>
1999...................................................... $ 2,419,000
2000...................................................... 452,000
2001...................................................... 225,000
2002...................................................... 98,000
2003...................................................... 62,000
Thereafter.................................................. 14,154,000
-----------
$17,410,000
===========
</TABLE>
Convertible Note
In June 1998, the Company issued a private placement of $15.0 million of 7%
convertible senior subordinated note (the "Convertible Debt") and warrant to
purchase 40,000 shares of common stock in exchange for $14.85 million net cash
proceeds. The Convertible Debt was immediately convertible at a ratio of $25.03
per share of common stock and the warrant provides for purchase of shares at
$23.00 per share of common stock at the holder's option. The purchase agreement
provides for an adjustment of the conversion amount for the subordinated debt
and warrant exercise price for any stock dividends, splits and other changes as
defined in the respective agreements, so as to preserve the Convertible Debt
holder's relative rights. The conversion ratio and warrant exercise price per
common share were less than the fair value of the Company's common stock at the
date of issuance. The value of the conversion features was approximately
$124,000 and was immediately charged to interest expense and an increase in
additional paid-in capital. The value ascribed to the warrant of approximately
$723,000, was reflected as both a debt discount and an increase in additional
paid-in capital. The debt discount is accounted for as a component of interest
expense using the effective interest rate method.
The Convertible Debt requires quarterly interest payments through April 30,
2005, when the Company will be required to make principal payments of $3 million
each April 30 and October 31 thereafter through the final maturity date, April
30, 2007. The Company may begin making optional prepayments of the Convertible
Debt beginning May 30, 2000 subject to a certain minimum trading price of the
Company's common stock commencing on or after April 30, 2000. The Company is
subject to various affirmative and negative covenants contained in the
agreement, including minimum net worth and earnings requirements, and
limitations on additional indebtedness, asset disposals and asset additions. The
agreement required the holder of the Convertible Debt to consent to
subordination of the obligation to senior bank indebtedness discussed below. On
September 30, 1998, the Company was in compliance with all covenants with the
exception of the certain indebtedness covenant, which was cured subsequent to
year end. The Company has received a waiver from the note holder waiving the
right to demand repayment of the note as a result of the violation.
Credit Facility
Under terms of a revolving credit facility, dated June 9, 1998 and expiring
April 25, 2005, with a consortium of U.S. and non-U.S. banks, the Company may
borrow up to $75.0 million. The credit facility provides for interest only
payments through August 30, 2000, with escalating principal reductions each
three months from that date through maturity. Borrowings under the credit
facility bear interest at optional rates as specified in the agreement, subject
to the Company's election at the borrowing date. The Company is also required to
pay quarterly commitment fees of .5% on the average undrawn balance of the
F-63
<PAGE> 193
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 8 -- LONG TERM DEBT AND CAPITAL LEASE OBLIGATIONS -- (CONTINUED)
credit facility, which is included as a component of interest expense. There
were no borrowings under the credit facility at September 30, 1998. Subsequent
to year end, the Company has drawn approximately $24.0 million on the credit
facility to finance business acquisitions, including the repayment of acquired
subsidiary debt, and to fund operations. Covenants of the credit facility
require the Company to maintain certain debt-to-earnings and interest coverage
ratios. Other provisions limit capital expenditures, subsidiary indebtedness and
require certain minimum levels of earnings and net worth. On September 30, 1998,
the Company was in compliance with all covenants with the exception of the
certain indebtedness covenant, which was cured subsequent to September 30, 1998.
The Company has received a waiver from the lenders waiving their right to demand
repayment of the credit facility as a result of this violation.
NOTE 9 -- INCOME TAXES
The provision for income taxes is comprised by the following:
<TABLE>
<CAPTION>
SEVEN MONTHS
YEAR ENDED YEAR ENDED YEAR ENDED ENDED
FEBRUARY 29, FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30,
1996 1997 1998 1998
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Current
U.S. federal and state........... $ 38,000 $133,000 $ 272,000 $ 98,000
Canadian federal and
provincial..................... 59,000 70,000 1,402,000 767,000
-------- -------- ---------- ---------
97,000 203,000 1,674,000 865,000
-------- -------- ---------- ---------
Deferred
U.S. federal and state........... $ -- $ (2,000) $ -- $ (20,000)
Canadian federal and
provincial..................... 96,000 435,000 (41,000) (494,000)
-------- -------- ---------- ---------
96,000 433,000 (41,000) (514,000)
-------- -------- ---------- ---------
Total....................... $193,000 $636,000 $1,633,000 $ 351,000
======== ======== ========== =========
</TABLE>
The total tax provision differs from the amount computed using the U.S.
federal statutory income tax rates as follows:
<TABLE>
<CAPTION>
SEVEN MONTHS
YEAR ENDED YEAR ENDED YEAR ENDED ENDED
FEBRUARY 29, FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30,
1996 1997 1998 1998
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Pretax net income.................... $ 740,000 $4,066,000 $4,569,000 $1,580,000
U.S. statutory rates................. 34% 34% 34% 34%
Tax at statutory rates............... 252,000 1,382,000 1,553,000 537,000
Income taxable to S Corporation
shareholders....................... 1,000 (890,000) (165,000) (454,000)
Effect of change in tax status....... -- 125,000 -- --
Non deductible expenses.............. -- -- -- 185,000
U.S. state income taxes, net of
federal tax benefit................ -- 8,000 -- 5,000
Effect of graduated rates............ (60,000) -- -- --
Excess income tax payable in foreign
jurisdictions...................... -- 11,000 245,000 78,000
---------- ---------- ---------- ----------
$ 193,000 $ 636,000 $1,633,000 $ 351,000
========== ========== ========== ==========
</TABLE>
F-64
<PAGE> 194
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 9 -- INCOME TAXES -- (CONTINUED)
Undistributed earnings of the Company's Canadian subsidiaries amounted to
approximately $5.7 million at September 30, 1998. Essentially all of those
earnings are considered to be indefinitely reinvested and, accordingly, no
provision for U.S. federal and state income taxes has been provided thereon.
Upon distribution of those earnings in the form of dividends or otherwise, the
Company would be subject to both U.S. income taxes, net of foreign tax credits,
and withholding taxes payable in Canada.
The tax effects of temporary differences that give rise to deferred tax
assets and liabilities are as follows:
<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30,
1997 1998 1998
------------ ------------ -------------
<S> <C> <C> <C>
Current
Assets:
Allowance for doubtful accounts.............. $ -- $ -- $ (51,000)
Liabilities:
Deferred taxable income on uncompleted
contracts.................................. 580,000 534,000 479,000
-------- -------- ----------
$580,000 $534,000 $ 428,000
======== ======== ==========
Noncurrent
Liabilities:
Depreciation and amortization................ $ 27,000 $ 48,000 $2,626,000
Amortization of debt discount................ -- -- 322,000
Other........................................ -- -- 14,000
-------- -------- ----------
$ 27,000 $ 48,000 $2,962,000
======== ======== ==========
</TABLE>
NOTE 10 -- EARNINGS PER SHARE
The numerators and denominators of basic and fully diluted earnings per
share are as follows:
<TABLE>
<CAPTION>
(UNAUDITED)
SEVEN MONTHS SEVEN MONTHS
YEAR ENDED YEAR ENDED YEAR ENDED ENDED ENDED
FEBRUARY 29, FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30, SEPTEMBER 30,
1996 1997 1998 1997 1998
------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Numerator -- Net income as
reported...................... $ 547,000 $3,430,000 $2,936,000 $2,052,000 $1,229,000
Dividends on preferred
shares...................... (39,000) -- -- -- --
---------- ---------- ---------- ---------- ----------
$ 508,000 $3,430,000 $2,936,000 $2,052,000 $1,229,000
========== ========== ========== ========== ==========
Denominator -- Weighted average
number of shares outstanding
Basic weighted average number
of shares................... 4,776,000 4,776,000 5,263,000 4,776,000 6,531,000
Effect of dilutive stock
options and warrants........ -- -- 331,000 -- 1,105,000
---------- ---------- ---------- ---------- ----------
Diluted weighted average
number of shares........ 4,776,000 4,776,000 5,594,000 4,776,000 7,636,000
========== ========== ========== ========== ==========
</TABLE>
At September 30, 1998, 342,000 weighted-average shares associated with the
Convertible Debt discussed in Note 8 were excluded from the computation of
diluted earnings per share for the Transition Period because their inclusion
would have had an anti-dilutive effect on earnings per share. All other
potential common shares have been included in the diluted earnings per share
calculation. All potential
F-65
<PAGE> 195
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 10 -- EARNINGS PER SHARE -- (CONTINUED)
common shares were included in the calculation of diluted earnings per share for
the years ended February 29, 1996 and February 28, 1997 and 1998.
NOTE 11 -- STOCKHOLDERS' EQUITY
Redeemable Preferred Stock
During the year ended February 28, 1998, the Company merged with WTC
Holdings Ltd. and its wholly-owned subsidiary, Western Telecom Construction Ltd.
(collectively, "Western Telecom"). The merger was accounted for as a
pooling-of-interests and the February 28, 1997 financial statements have been
restated to include the accounts of Western Telecom. In February 1994, Western
Telecom issued 467 shares of Class A redeemable preferred stock. The preferred
stock ranked in priority to common stock in the event of liquidation,
dissolution or winding up of the affairs of Western Telecom. The shares also
contain stated redemption values and rights to 5% noncumulative dividends when
declared by the Board of Directors. There were no unpaid dividends at February
28, 1997 and 1998. The preferred stock has no voting rights.
The shares have been reflected at their total redemption price of $450,000
in the February 28, 1997 balance sheet. During the year ended February 28, 1998,
the Company redeemed all outstanding shares.
Common Stock
The Company has a single class of $0.01 par value common stock. Authorized
shares total 10 million, of which 2,580,000 have been registered on Form SB-2
with the Securities and Exchange Commission under the 1933 Securities Act. A
total of 1,200,000 of the registered securities were sold in connection with an
initial public offering on October 15, 1997. Proceeds from the offering totaled
$7.5 million, net of $485,000 of underwriting costs.
As disclosed in Note 3, an additional 1,277,000 shares were issued in
connection with various business combinations during the Transition Period and
an additional 3,969,000 shares were issued in the fiscal year ended February 28,
1998. During the fiscal year ended February 28, 1998, a total of 7,000 shares
were issued as stock awards to employees of the Company and acquired businesses
as incentive to remain in the employ of the Company.
Stock Warrants
In connection with its initial public offering in October 1997, the Company
issued stock warrants to purchase 1,380,000 shares of common stock of the
Company with an exercise price of $9.00 per share. The warrants contained a
provision whereby the Company could call for redemption of the warrants if the
closing price of the Company's common stock equaled or exceeded $15.00 for ten
consecutive days. During the Transition Period 559,000 warrants to purchase
559,000 shares of common stock were tendered for exercise with aggregate
proceeds of $4.79 million to the Company, net of commissions and related
expenses of $243,000. On September 29, 1998, the Company exercised its right to
call the remaining warrants, with a redemption date of October 30, 1998.
Subsequent to September 30, 1998 and prior to the redemption date, 819,000
warrants were tendered for conversion with gross proceeds of $7.37 million,
resulting in the cancellation of the remaining warrants which were not tendered.
NOTE 12 -- STOCK OPTIONS
The Company has two stock option plans that provide for the granting of
stock options to certain officers, employees, directors and consultants of the
Company and its subsidiaries. These options generally
F-66
<PAGE> 196
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 12 -- STOCK OPTIONS -- (CONTINUED)
vest over a period of three years from the date of grant (as determined by the
Company's Compensation Committee) and have a maximum exercise term of ten years
from the date of grant. The 1998 Stock Incentive Compensation Plan (the "1998
Plan") is the only plan with stock option awards currently available for grant;
a prior plan has stock options exercisable at September 30, 1998 to purchase up
to 400,000 shares of common stock. The Company is authorized to grant options
for up to ten percent of the issued shares of common stock under the 1998 Plan.
A summary of awards granted under the plans is as follows for the fiscal year
ended February 28, 1998 and the Transition Period:
<TABLE>
<CAPTION>
YEAR ENDED SEVEN MONTHS ENDED
FEBRUARY 28, 1998 SEPTEMBER 30, 1998
-------------------------- --------------------------
WEIGHTED- WEIGHTED-
NUMBER OF AVERAGE NUMBER OF AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE
--------- -------------- --------- --------------
<S> <C> <C> <C> <C>
Options outstanding at beginning of
year.................................. -- -- 592,000 $ 7.78
Options granted......................... 592,000 $7.78 121,500 18.63
Options exercised....................... -- -- 37,000 7.80
Options forfeited....................... -- -- -- --
------- ----- ------- ------
Options outstanding at end of year...... 592,000 $7.78 676,500 $ 9.87
======= ===== ======= ======
Options exercisable at end of year...... 105,000 $8.07 125,500 $ 7.85
======= ===== ======= ======
</TABLE>
A summary of stock options outstanding as of September 30, 1998 is as
follows:
<TABLE>
<CAPTION>
WEIGHTED-
NUMBER AVERAGE NUMBER WEIGHTED-
OUTSTANDING AT REMAINING WEIGHTED- EXERCISABLE AT AVERAGE
SEPTEMBER 30, CONTRACTUAL AVERAGE SEPTEMBER 30, EXERCISE
RANGE OF EXERCISE PRICES 1998 LIFE EXERCISE PRICE 1998 PRICE
- ------------------------ -------------- ---------------- -------------- -------------- ---------
<S> <C> <C> <C> <C> <C>
$13.40 to 26.00........ 137,000 4.8 years $18.60 -- --
$ 7.50 to 8.25......... 525,000 3.6 years 7.24 123,300 $7.99
$ 1.00................. 4,500 3.4 years 1.00 1,500 1.00
$ .01................. 10,000 3.6 years 0.01 700 0.01
</TABLE>
The Company applies the accounting provisions of APB Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretations for its
stock-based plans. Accordingly, costs for employee stock options or issuance of
shares is measured as the excess, if any, of the fair value of the Company's
common stock at the measurement date over the amount the employee must pay to
acquire the stock. The cost is recognized ratably by the Company as compensation
expense over the vesting period. The expense for the fiscal year ended February
28, 1998 and the Transition Period was $21,000 and $35,000 respectively.
The Company adopted the disclosure provisions of SFAS No. 123, Accounting
for Stock-Based Compensation ("SFAS No. 123"), which was effective as of January
1, 1996. The fair value of each
F-67
<PAGE> 197
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 12 -- STOCK OPTIONS -- (CONTINUED)
option was estimated on the date of grant using the Black-Scholes option pricing
model and the following assumptions:
<TABLE>
<CAPTION>
SEVEN MONTHS
YEAR ENDED ENDED
FEBRUARY 28, SEPTEMBER 30,
1998 1998
------------ -------------
<S> <C> <C>
Risk-free interest rate..................................... 6.38% 4.75%
Expected life............................................... 2.7 years 2.7 years
Expected volatility......................................... 29% 70%
Expected dividend yield..................................... 0% 0%
</TABLE>
Had the Company elected to recognize compensation expense as provided for
by SFAS No. 123, the Company's net income amounts on a pro forma basis for the
year ended February 28, 1998 and the Transition Period would have been as
follows:
<TABLE>
<CAPTION>
SEVEN MONTHS
YEAR ENDED ENDED
FEBRUARY 28, SEPTEMBER 30,
1998 1998
------------ -------------
<S> <C> <C>
Pro forma net income adjusted............................... $2,721,000 $838,000
========== ========
Pro forma basic earnings per share.......................... $ 0.52 $ 0.13
========== ========
Pro forma diluted earning per share......................... $ 0.49 $ 0.11
========== ========
</TABLE>
The weighted average fair values per share at the date of grant for options
granted during the year ended February 28, 1998 and the Transition Period were
as follows:
<TABLE>
<CAPTION>
SEVEN MONTHS
YEAR ENDED ENDED
FEBRUARY 28, SEPTEMBER 30,
1998 1998
------------ -------------
<S> <C> <C>
Options with exercise prices less than the fair value of the
stock at the date of grant................................ 39,500 19,100
-- weighted average fair value......................... $ 6.00 $ 12.00
Options with exercise prices equal to the fair value of the
stock at the date of grant................................ 311,500 102,400
-- weighted average fair value......................... $ 1.25 $ 9.00
Options with exercise prices greater than the fair value of
the stock at the date of grant............................ 241,000 --
-- weighted average fair value......................... $ 0.50 --
</TABLE>
F-68
<PAGE> 198
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 13 -- SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flow information is as follows:
<TABLE>
<CAPTION>
FEBRUARY 29, FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30,
1996 1997 1998 1998
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Cash paid for interest................ $ 91,000 $80,000 $ 107,000 $ 312,000
Cash paid for income taxes............ 128,000 77,000 177,000 280,000
Non-cash transactions
Stock issuances for business
acquisitions..................... -- -- 1,184,000 8,100,000
</TABLE>
NOTE 14 -- RETIREMENT PLAN
The Company's subsidiary, Westower Communications Inc., adopted a defined
contribution retirement plan, effective January 1, 1997. The plan contains
certain participation criteria and allows for both employee and employer
discretionary contributions. The total Company funded discretionary contribution
for the years ended February 29, 1996 and February 28, 1997 and 1998 was $0,
$46,000 and $52,000, respectively. There were no employer contributions during
the Transition Period.
NOTE 15 -- RELATED PARTY TRANSACTIONS
Advance to Related Parties
During the fiscal year ended February 28, 1998, the Company advanced
$119,000 to a Canadian corporation owned by certain stockholders of Westower
Corporation. Proceeds were used by the Corporation to purchase facilities leased
by two of the Company's subsidiaries. The advance was repaid during the
Transition Period. The Company also advanced $77,000 to several stockholders
during the fiscal year ended February 28, 1998 which were repaid during the
Transition Period. At September 30, 1998, additional related party advances
include $379,000 of unsecured non-interest bearing shareholder loans made by
subsidiaries, prior to acquisition, during the Transition Period which are
expected to be paid in full subsequent to September 30, 1998. At September 30,
1998, the Company has a $65,000 receivable from a former shareholder of an
acquired S corporation. The acquired S corporation made a distribution to the
shareholder, prior to the combination, in an amount to meet the shareholder's
current estimated tax obligation. Subsequent to the combination it was
determined that the tax liability was approximately $65,000 overestimated and a
receivable for the excess distribution has been recorded. The Company expects to
collect this amount in full subsequent to September 30, 1998.
Note Receivable
At September 30, 1998, the Company had a note receivable for $495,000, plus
accrued interest of $17,000, from an organization with which they share a common
director. The note bears interest at 12% and is collateralized by warrants to
purchase shares of the Company's common stock, and is due on demand.
Management Services and Accounts Payable
In prior years the Company received consulting services from Westower
Consulting Ltd., a Canadian corporation owned by a stockholder of Westower
Corporation. Charges for these services were $94,000 and $126,000 in the fiscal
years ended February 28, 1997 and 1998, respectively. Included in trade accounts
payable at February 28, 1998 is $39,000 due to Westower Consulting Ltd. Fees
billed by related entities
F-69
<PAGE> 199
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 15 -- RELATED PARTY TRANSACTIONS -- (CONTINUED)
generally do not continue subsequent to acquisition by the Company as the
related services are performed by employees and officers of the Company.
Notes and Advances Payable to Related Parties
Notes and advances payable to related parties consist of the following:
<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30,
1997 1998 1998
------------ ------------ -------------
<S> <C> <C> <C>
Current
Unsecured advances and notes payable to
stockholders and officers, paid in full
during the Transition Period................ $ -- $ 871,000 $ --
Unsecured advances payable to officers and
stockholders, in Canadian dollars, with no
stated interest rate and no specific
repayment terms, paid in full during the
Transition Period........................... -- 173,000 --
Unsecured advances payable to officers and
stockholders, with no stated interest rate,
and no specific repayment terms............. -- -- 228,000
Unsecured notes payable to officers and
stockholders, paid in full during the
transition period........................... 672,000 1,000,000 --
-------- ---------- --------
$672,000 $2,044,000 $228,000
======== ========== ========
</TABLE>
Facility Leases
Two subsidiaries acquired during the fiscal year ended February 28, 1998,
501053 B.C. Ltd. and National Tower Service Ltd., lease their operating
facilities, on a month-to-month basis, from Canadian corporations owned by
certain stockholders of Westower Corporation. Lease payments made during the
Transition Period were $39,000 and there were no significant lease payments made
to the stockholders during the fiscal year ended February 28, 1998.
NOTE 16 -- COMMITMENTS AND CONTINGENCY
The Company leases operating facilities, office equipment and vehicles
under noncancelable operating lease agreements. Future minimum lease payments
are as follows:
<TABLE>
<CAPTION>
YEAR ENDING SEPTEMBER 30:
-------------------------
<S> <C>
1999........................................................ $ 607,000
2000........................................................ 348,000
2001........................................................ 203,000
2002........................................................ 67,000
2003........................................................ 63,000
Thereafter.................................................. 52,000
----------
Total....................................................... $1,340,000
==========
</TABLE>
Rent and lease expense was $29,000, $224,000, $259,000 and $632,000 for the
fiscal years ended February 29, 1996 and February 28, 1997 and 1998 and the
Transition Period, respectively.
F-70
<PAGE> 200
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 16 -- COMMITMENTS AND CONTINGENCY -- (CONTINUED)
LITIGATION
The Company is subject to lawsuits and other legal claims in the normal
course of its operations. Management believes that the resolution of any such
lawsuits and legal claims, if any, will not have a material impact on the
Company's financial position, results of operations or cash flows.
NOTE 17 -- CREDIT RISK AND BUSINESS CONCENTRATIONS
Financial instruments that potentially subject the Company to
concentrations of credit consist primarily of cash, cash equivalents and trade
accounts receivable. The Company places its temporary cash investments with a
major financial institution. At times, deposits with any one institution may
exceed federally insured limits. The Company extends credit to customers based
on evaluation of customer's financial condition and credit history. Collateral
is generally not required. Customers include large Canadian and U.S. companies
concentrated in the telecommunications industry.
Contract revenues from two customers accounted for 29% of revenues during
the fiscal year ended February 28, 1998, and one customer accounted for 56% of
revenues during the fiscal year ended February 28, 1997. Accounts receivable
from two customers comprise 48% of accounts receivable at February 28, 1998 and
one customer accounted for 39% of account receivable at February 28, 1997. There
were no customers who accounted for greater than 10% of sales for the Transition
Period and there were no customers with accounts receivable representing 10% or
more of the total accounts receivable at September 30, 1998.
Management expects that sales to relatively few customers will continue to
account for a high percentage of its revenues into the foreseeable future and
believes the Company's financial results depend in significant part upon the
success of these customers. Although the composition of the group comprising the
Company's largest customers may vary from period to period, the loss of a
significant customer or reduction in orders by any significant customers,
including reductions due to market, economic or competitive conditions in the
wireless communications industry, may have an adverse effect on the Company's
business, financial condition and results of operations.
NOTE 18 -- SEGMENT INFORMATION
The Company's operations are comprised of a number of communication tower
construction entities that were recently acquired. While management assesses the
operating results of each of these entities separately, as these entities and
its existing operations exhibit similar financial performance and have similar
economic characteristics, they have been aggregated as one segment.
F-71
<PAGE> 201
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 18 -- SEGMENT INFORMATION -- (CONTINUED)
The following table summarizes contract and other revenues and long-lived
assets related to the respective countries in which the Company operates.
<TABLE>
<CAPTION>
FEBRUARY 29, 1996
-----------------------------------------
TOTAL UNITED STATES CANADA
----------- ------------- -----------
<S> <C> <C> <C>
Contract and other revenues................... $14,775,000 $ 8,897,000 $ 5,878,000
</TABLE>
<TABLE>
<CAPTION>
FEBRUARY 28, 1997
-----------------------------------------
TOTAL UNITED STATES CANADA
----------- ------------- -----------
<S> <C> <C> <C>
Contract and other revenues................... $46,091,000 $39,177,000 $ 6,914,000
Long-lived assets............................. $ 2,707,000 $ 1,000,000 $ 1,707,000
</TABLE>
<TABLE>
<CAPTION>
FEBRUARY 28, 1998
-----------------------------------------
TOTAL UNITED STATES CANADA
----------- ------------- -----------
<S> <C> <C> <C>
Contract and other revenues................... $41,662,000 $22,160,000 $19,502,000
Long-lived assets............................. $ 4,321,000 $ 1,196,000 $ 3,125,000
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
-----------------------------------------
TOTAL UNITED STATES CANADA
----------- ------------- -----------
<S> <C> <C> <C>
Contract and other revenues................... $31,944,000 $19,982,000 $11,962,000
Long-lived assets............................. $ 7,574,000 $ 3,729,000 $ 3,845,000
</TABLE>
Long-lived assets are comprised of property, plant and equipment and
excludes intangible assets.
NOTE 19 -- DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair values of cash and cash equivalents, trade accounts receivable and
payable, and other current liabilities approximate their carrying amounts. The
fair values of advances to and from related parties approximate their fair value
due to the short term nature of the instruments. The fair values of long-term
debt, which are based on the present values of the underlying cash flows
discounted at the Company's incremental borrowing rates, are as follows:
<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 28, SEPTEMBER 30,
1997 1998 1998
------------ ------------ -------------
<S> <C> <C> <C>
Long-term debt................................... $822,000 $794,000 $19,446,000
</TABLE>
NOTE 20 -- SUBSEQUENT EVENTS
On November 10, 1998 the Company completed the acquisition of Summit
Communications, LLC ("Summit"), a Mississippi limited liability company which
engages in operations similar to those of the Company. The merger was effected
by exchanging 200,000 shares of common stock valued at approximately $4.1
million, based on the publicly traded price, $4.4 million in cash, and the
assumption of certain liabilities, for all membership interests in Summit. The
former members of Summit may also receive an additional 100,000 shares of common
stock, based on certain performance criteria during the three years following
the date of acquisition. The acquisition was accounted for using the purchase
method for business combinations resulting in goodwill of approximately $8.0
million.
F-72
<PAGE> 202
WESTOWER CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 20 -- SUBSEQUENT EVENTS -- (CONTINUED)
On October 30, 1998 the Company completed the acquisition of Teletronics
Management Services, Inc. ("Teletronics"). The acquisition was effected by
exchanging 188,000 shares of common stock valued at approximately $4 million,
based on the publicly traded price, $1 million in cash, and the assumption of
certain liabilities including distributions payable to former shareholders in
the amount of $800,000, for all outstanding shares of Teletronics. The
acquisition was accounted for using the purchase method for business
combinations resulting in goodwill of approximately $5.0 million.
The Company is currently in negotiations with certain tower construction
companies concerning acquisition by Westower. The Company is also in
negotiations with certain third parties concerning the acquisition of wireless
communication towers, and with a financial institution to arrange financing for
the wireless communication tower purchases, should the negotiations conclude
successfully. None of the negotiations are finalized and there is no assurance
that the Company will be successful in concluding these negotiations, or if the
Company is successful, that the acquisitions will not be dilutive to existing
shareholders.
F-73
<PAGE> 203
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors
CORD Communications, Inc.
We have audited the accompanying balance sheets of CORD Communications,
Inc. as of June 30, 1998 and 1997, and the related statements of operations,
changes in stockholders' equity (deficit), and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 financial position of CORD Communications, Inc. as
of June 30, 1998 and 1997, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
As described in note 13 to the financial statements, the Company was sold
subsequent to June 30, 1998.
/s/ Moss Adams LLP
Beaverton, Oregon
October 21, 1998
F-74
<PAGE> 204
CORD COMMUNICATIONS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30,
-----------------------
1998 1997
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 27,730 $ 913,514
Accounts receivable -- trade, (net of allowance).......... 1,951,901 2,452,205
Costs and estimated earnings in excess of billings on
uncompleted contracts.................................. 151,817 735,634
Unbilled amounts on completed contracts................... 175,209 394,502
Accrued interest receivable............................... 14,410 7,744
Employee advances......................................... 1,471 5,961
Refundable income taxes................................... 440,320 --
Prepaid expenses.......................................... 43,392 11,069
---------- ----------
Total current assets........................................ 2,806,250 4,520,629
Property and equipment, net of accumulated depreciation..... 401,834 399,218
Other assets................................................ 42,949 39,749
---------- ----------
Total assets................................................ $3,251,033 $4,959,596
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable -- trade................................. $1,459,981 $1,247,921
Note payable.............................................. 500,000 155,000
Notes payable -- stockholder and related party............ -- 87,402
Current portion, long-term debt and capital lease
obligations............................................ 38,897 48,474
Accrued wages and payroll taxes........................... 243,426 193,051
Other accrued liabilities................................. 83,562 17,832
Billings in excess of costs and estimated earnings on
uncompleted contracts.................................. 443,185 69,352
Income taxes payable...................................... -- 547,000
Deferred income taxes..................................... 194,800 841,478
---------- ----------
Total current liabilities................................... 2,963,851 3,207,510
---------- ----------
Long-term debt and capital lease obligations................ 53,766 86,121
---------- ----------
Deferred income taxes....................................... 260,700 --
---------- ----------
Stockholders' equity (deficit):
Common stock, $1 par value, 1,000,000 shares authorized,
2,000 shares issued, 873 shares outstanding............ 873 873
Additional paid-in-capital................................ 350,878 350,878
Retained earnings (deficit)............................... (318,437) 1,374,812
Note receivable -- stock subscription..................... (60,598) (60,598)
---------- ----------
Total stockholders' equity (deficit)........................ (27,284) 1,665,965
---------- ----------
Total liabilities and stockholders' equity.................. $3,251,033 $4,959,596
========== ==========
</TABLE>
See accompanying notes.
F-75
<PAGE> 205
CORD COMMUNICATIONS, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------
1998 1997
----------- -----------
<S> <C> <C>
CONTRACT REVENUES........................................... $11,010,207 $15,902,768
COST OF CONTRACTS:
Subcontractors............................................ 3,642,346 3,522,513
Labor..................................................... 2,754,248 3,672,345
Materials and supplies.................................... 1,532,546 2,008,403
Equipment costs and rental................................ 615,980 867,399
Other..................................................... 805,431 875,529
----------- -----------
Total cost of contracts..................................... 9,350,551 10,946,189
GROSS PROFIT................................................ 1,659,656 4,956,579
GENERAL AND ADMINISTRATIVE EXPENSES......................... 4,157,468 1,916,076
----------- -----------
OPERATING INCOME (LOSS)..................................... (2,497,812) 3,040,503
OTHER INCOME (EXPENSES):
Interest income........................................... 10,887 8,044
Interest expense.......................................... (41,521) (100,982)
Other..................................................... 37,088 18,826
----------- -----------
Total other income (expenses)............................... 6,454 (74,112)
INCOME (LOSS) BEFORE INCOME TAXES........................... (2,491,358) 2,966,391
PROVISION FOR INCOME TAXES.................................. (798,109) 1,339,829
----------- -----------
NET (LOSS) INCOME........................................... $(1,693,249) $ 1,626,562
=========== ===========
</TABLE>
See accompanying notes.
F-76
<PAGE> 206
CORD COMMUNICATIONS, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
NOTE
COMMON STOCK ADDITIONAL RETAINED RECEIVABLE
--------------- PAID-IN EARNINGS STOCK
SHARES AMOUNT CAPITAL (DEFICIT) SUBSCRIPTION TOTAL
------ ------ ---------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1996........ 873 $873 $350,878 $ (251,750) $(80,207) $ 19,794
Receipts on note receivable
stock subscription.......... -- -- -- -- 19,609 19,609
Net income for the year....... -- -- -- 1,626,562 -- 1,626,562
--- ---- -------- ----------- -------- -----------
Balance, June 30, 1997........ 873 873 350,878 1,374,812 (60,598) 1,665,965
--- ---- -------- ----------- -------- -----------
Loss for the year............. -- -- -- (1,693,249) -- (1,693,249)
--- ---- -------- ----------- -------- -----------
Balance, June 30, 1998........ 873 $873 $350,878 $ (318,437) $(60,598) $ (27,284)
=== ==== ======== =========== ======== ===========
</TABLE>
See accompanying notes.
F-77
<PAGE> 207
CORD COMMUNICATIONS, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------------
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)........................................... $(1,693,249) $ 1,626,562
Adjustments to reconcile net income (loss) to net cash from
operating activities:
Depreciation and amortization............................. 131,561 73,507
Deferred income taxes..................................... (385,978) 780,000
Gain (loss) on sale of fixed assets....................... 10,436 (4,284)
Changes in certain operating assets and liabilities:
Accounts receivable -- trade........................... 500,304 (1,716,878)
Costs and estimated earnings in excess of billings..... 583,817 (662,048)
Unbilled amounts on completed contracts................ 219,293 (394,502)
Accrued interest receivable............................ (6,666) 3,466
Employee advances...................................... 4,490 (4,976)
Refundable income taxes................................ (440,320) --
Prepaid expenses....................................... (32,323) (16)
Other assets........................................... (3,200) (26,074)
Accounts payable -- trade.............................. 212,060 875,528
Accrued wages and payroll taxes........................ 50,375 143,130
Other accrued liabilities.............................. 65,730 (1,702)
Billings in excess of costs and estimated earnings..... 373,833 (65,560)
Income taxes payable................................... (547,000) 542,654
----------- -----------
Net cash (used in) from operating activities...... (956,837) 1,168,807
----------- -----------
CASH FLOWS RELATED TO INVESTING ACTIVITIES
Decrease (increase) in note receivable -- stock
subscription.............................................. -- 19,609
Proceeds from sale of equipment............................. 2,800 --
Purchase of property and equipment.......................... (147,413) (290,046)
----------- -----------
Net cash used in investing activities............. (144,613) (270,437)
----------- -----------
CASH FLOWS RELATED TO FINANCING ACTIVITIES
Proceeds from issuance of long-term debt and capital lease
obligations............................................... 8,000 123,620
Principal payments on long-term debt and capital lease
obligations............................................... (49,932) (60,481)
Proceeds from stockholder loans............................. -- 6,767
Principal payments on stockholder loans..................... (87,402) --
Net change in notes payable................................. 345,000 (110,000)
----------- -----------
Net cash from (used in) financing activities...... 215,666 (40,094)
----------- -----------
NET (DECREASE) INCREASE IN CASH............................. (885,784) 858,276
CASH AND CASH EQUIVALENTS, beginning of year................ 913,514 55,238
----------- -----------
CASH AND CASH EQUIVALENTS, end of year...................... $ 27,730 $ 913,514
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid............................................... $ 41,521 $ 100,982
=========== ===========
Interest received........................................... $ 4,221 $ 11,510
=========== ===========
Income taxes paid........................................... $ 575,188 $ 505
=========== ===========
</TABLE>
See accompanying notes.
F-78
<PAGE> 208
CORD COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
CORD Communications, Inc. was incorporated in July 1994 in the state of
California. The Company constructs cellular communication sites, underground and
overhead telephone and utility lines, and commercial tenant improvements. In
addition, they perform site acquisition and lease negotiations, and provide land
use planning services. The Company operates primarily in California, Washington,
and Oregon.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents. At June 30, 1997, cash and cash
equivalents that exceeded the FDIC insurance limits were $711,410.
ACCOUNTS RECEIVABLE
In the normal course of business, the Company extends credit to customers,
principally with customers located in California, Washington, and Oregon.
Collectibility of accounts receivable is periodically assessed by management.
This assessment provides the basis for any allowance for doubtful accounts and
related bad debt expense. An allowance of $83,000 was considered necessary by
management at June 30, 1998. No allowance for doubtful accounts was considered
necessary by management as of June, 30 1997. A concentration of credit risk
exists in connection with the Company's trade customers due to the proximity of
location and services provided. As of June 30, 1998 and 1997, the Company had
accounts receivable balances of $1,951,901 and $2,452,205, which were exposed to
the concentration of credit risk. Credit risk related to contract receivables is
minimized by the Company's rights under lien laws on contracts subject to those
laws.
REVENUE AND COST RECOGNITION
Revenues from fixed-price construction contracts are recognized on the
percentage of completion method, measured on the basis of cost incurred to date
to total estimated cost for each contract. Because of inherent uncertainties in
estimating cost to complete, it is at least reasonably possible that the
estimates used will change in the near term.
Contract costs include all direct material, equipment and labor costs,
subcontract costs and those indirect costs related to contract performance, such
as supplies, travel and per diem costs. General and administrative costs are
charged to expense as incurred. Provisions for estimated losses on uncompleted
contracts are made in the period in which such losses are determined. Changes in
job performance, job conditions, and estimated profitability, including those
arising from final contract settlements, may result in revisions to costs and
income and are recognized in the period in which the revisions are determined.
Claims are generally included in contract revenues when settled.
The asset, "Cost and estimated earnings in excess of billings on
uncompleted contracts," represents revenues recognized in advance of amounts
billed. The liability, "Billings in excess of costs and estimated earnings on
uncompleted contracts," represents billings in advance of revenues recognized.
F-79
<PAGE> 209
CORD COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment is carried at cost and is depreciated on the
straight-line method over the estimated useful lives of the assets.
<TABLE>
<S> <C>
Vehicles.................................................... 5 years
Office furniture and equipment.............................. 3 to 7 years
Construction equipment...................................... 5 to 7 years
Leasehold improvements...................................... 3 years
</TABLE>
Property and equipment consisted of the following at June 30, 1998 and
1997, respectively:
<TABLE>
<CAPTION>
JUNE 30,
---------------------
1998 1997
--------- ---------
<S> <C> <C>
Vehicles.................................................... $ 342,782 $ 275,864
Office furniture and equipment.............................. 183,760 137,735
Construction equipment...................................... 119,028 112,648
Leasehold improvements...................................... 19,361 19,361
--------- ---------
664,931 545,608
Less accumulated depreciation............................... (263,097) (146,390)
--------- ---------
$ 401,834 $ 399,218
========= =========
</TABLE>
The cost and related accumulated depreciation of assets sold or disposed
are removed from the accounts, and any resulting gain or loss is included in
operations. Repairs and maintenance expenditures are expensed as incurred.
INCOME TAXES
Income taxes are provided for the tax effects of transactions reported in
the financial statements, and consist of taxes currently due plus deferred taxes
related primarily to different methods of accounting for depreciation and the
use of the cash method for income tax purposes. The deferred taxes represent the
future tax return consequences of those differences, which will either be
taxable or deductible when the assets and liabilities are recovered or settled.
USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS
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.
Significant estimates used in preparing these financial statements include
estimated costs to complete which have a direct effect on gross profit.
VALUATION OF LONG LIVED ASSETS AND CHANGE IN ACCOUNTING POLICY
The Company periodically reviews long-lived assets and certain identifiable
intangibles whenever events of changes in circumstance indicate that the
carrying amount of an asset may not be recoverable. There will be no provisions
for impairment during 1998 or 1997.
F-80
<PAGE> 210
CORD COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
2. NOTE PAYABLE
The Company has a line of credit with South Umpqua State Bank, which bears
interest at the Wall Street Journal's published prime rate plus 1%. The Company
may borrow up to $1,000,000 under the terms of the line of credit. The note is
collateralized by equipment, intangible assets, chattel paper accounts,
equipment, and general intangibles. The note payable is also personally
guaranteed by the stockholders of the Company. Borrowing on the line is limited
to 70% of receivables less than 90 days old, less retainage receivables. The
line of credit was scheduled to expire on February 1, 1999, however, the note
was paid off on September 1, 1998 (see note 13).
3. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
<TABLE>
<CAPTION>
JUNE 30,
-------------------
1998 1997
-------- --------
<S> <C> <C>
Notes payable to Ford Motor Credit Corp. with interest from
9.75% to 10.25%, payable in monthly installments of
$1,149, including interest, maturing from 1999 through
2001, collateralized by vehicles.......................... $ 25,798 $ 36,431
Notes payable to South Umpqua State Bank with interest from
8.48% to 10.75%, payable in monthly installments of
$1,950, including interest, maturing from 1998 through
2001, collateralized by vehicles.......................... 21,968 36,074
Note payable to Damerow Ford with interest at 8.65%, payable
in monthly installments of $646, including interest,
maturing in 2001, collateralized by a vehicle............. 21,349 26,950
Note payable on equipment with interest from 1.9%, to 11.5%
payable in monthly installments of $1,716, including
interest, maturing in 1998 through 2001, collateralized by
equipment................................................. 11,518 28,068
Capital lease obligations for equipment, payable in monthly
installments of $608, including interest, inputed from
15.29% to 20.92%, maturing in 1999 through 2001,
collateralized by equipment............................... 12,030 7,072
-------- --------
92,663 134,595
Less current portion........................................ (38,897) (48,474)
-------- --------
Long-term portion........................................... $ 53,766 $ 86,121
======== ========
</TABLE>
Future maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
YEAR ENDING AMOUNT
JUNE 30, MATURING
----------- --------
<S> <C>
1999........................................................ $38,897
2000........................................................ 27,571
2001........................................................ 22,396
2002........................................................ 3,743
2003........................................................ 56
-------
$92,663
=======
</TABLE>
F-81
<PAGE> 211
CORD COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
4. OPERATING LEASE COMMITMENTS
The Company leases office and storage space, vehicles, and communication
analyzing equipment under non-cancelable operating leases expiring on various
dates through February 2000. Total rental payments amounted to $229,482 and
$109,964 for the years ended June 30, 1998 and 1997, respectively.
Future minimum rental commitments under non-cancelable leases payable over
the remaining lives of the leases are:
<TABLE>
<CAPTION>
MINIMUM
LEASE
YEAR ENDING JUNE 30, PAYMENTS
-------------------- --------
<S> <C>
1999........................................................ $73,793
2000........................................................ 7,098
-------
$80,891
=======
</TABLE>
5. COSTS AND ESTIMATED EARNINGS ON CONTRACTS IN PROGRESS
The Company has recorded the following costs and estimated earnings on
contracts in progress:
<TABLE>
<CAPTION>
JUNE 30,
-------------------------
1998 1997
----------- -----------
<S> <C> <C>
Costs incurred on contracts in progress.................... $ 1,506,191 $ 1,563,604
Estimated earnings......................................... 402,937 807,434
----------- -----------
Revenue recognized to date............................... 1,909,128 2,371,038
Less billings to date.................................... (2,200,496) (1,704,756)
----------- -----------
$ (291,368) $ 666,282
=========== ===========
</TABLE>
Included in the accompanying balance sheet under the following captions:
<TABLE>
<CAPTION>
JUNE 30,
--------------------
1998 1997
--------- --------
<S> <C> <C>
Costs and estimated earnings in excess of billings on
contracts
in progress............................................... $ 151,817 $735,634
Billings in excess of costs and estimated earnings on
contracts
in progress............................................... (443,185) (69,352)
--------- --------
$(291,368) $666,282
========= ========
</TABLE>
F-82
<PAGE> 212
CORD COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
6. CONTRACT BACKLOG
The following schedule summarizes changes in backlog on contracts during
the year ended June 30, 1998 and 1997. Backlog represents the amount of gross
revenue the Company expects to realize from work to be performed on contracts in
progress at year-end.
<TABLE>
<CAPTION>
JUNE 30,
---------------------------
1998 1997
------------ ------------
<S> <C> <C>
Backlog balance, beginning of year....................... $ 1,279,115 $ 2,568,957
New contracts during the year............................ 10,571,539 14,612,926
------------ ------------
11,850,654 17,181,883
Less: contract revenue earned during the year............ (11,010,207) (15,902,768)
------------ ------------
Backlog balance, end of year............................. $ 840,447 $ 1,279,115
============ ============
</TABLE>
7. INCOME TAXES
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
JUNE 30,
----------------------
1998 1997
--------- ----------
<S> <C> <C>
Current
Federal................................................... $(404,249) $ 426,013
State..................................................... (7,883) 133,816
--------- ----------
(412,132) 559,829
--------- ----------
Deferred
Federal................................................... (308,781) 624,000
State..................................................... (77,196) 156,000
--------- ----------
(385,977) 780,000
--------- ----------
$(798,109) $1,339,829
========= ==========
</TABLE>
The difference between the actual income tax provision (benefit) and the
tax provision (benefit) computed by applying the statutory federal rate to
income (loss) before taxes is attributable to the following:
<TABLE>
<CAPTION>
JUNE 30,
----------------------------------------------
1998 1997
-------------------- --------------------
AMOUNT % AMOUNT %
--------- ----- ---------- ----
<S> <C> <C> <C> <C>
Federal statutory income tax provision
(benefit).................................. $(847,062) (34.0)% $1,008,573 34.0%
State statutory income tax provision
(benefit).................................. (211,766) (8.5)% 252,143 8.5%
Carryback of net operating losses (NOL) in
years with rates different than statutory
rates...................................... 13,300 0.5% -- --
Change in valuation allowance for deferred
taxes...................................... 283,370 11.4% -- --
Other........................................ (35,951) (1.4)% 79,113 2.7%
--------- ----- ---------- ----
Actual income tax provision (benefit)........ $(798,109) (32.0)% $1,339,829 45.2%
========= ===== ========== ====
</TABLE>
F-83
<PAGE> 213
CORD COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
7. INCOME TAXES -- (CONTINUED)
The composition of the deferred income tax assets and liabilities at June
30, 1998 and 1997 are:
<TABLE>
<CAPTION>
JUNE 30,
-----------------------
1998 1997
--------- -----------
<S> <C> <C>
Current deferred tax assets
Differences in basis in assets due to cash method used for
income taxes........................................... $ -- $ 751,789
Bad debts, vacation accrual and other..................... 115,100 --
Tax benefit of net operating loss carryforwards........... 283,370 --
Valuation allowance....................................... (283,370) --
--------- -----------
115,100 751,789
--------- -----------
Current deferred tax liabilities
Differences in basis in liabilities due to cash method
used for income taxes.................................. -- (1,593,267)
Difference in revenue recognized on uncompleted
contracts.............................................. (171,300) --
Deferral of taxes from conversion from cash to accrual
completed contract..................................... (134,500) --
Other..................................................... (4,100) --
--------- -----------
(309,900) (1,593,267)
--------- -----------
Net current deferred tax liabilities........................ $(194,800) $ (841,478)
========= ===========
Non-current deferred tax assets
Capitalization differences between financial and tax
accounting................................................ $ 9,000 $ 1,266
Other..................................................... 19,300 --
--------- -----------
28,300 1,266
--------- -----------
Non-current deferred tax liabilities
Deferral of taxes from conversion from cash to accrual
completed contract..................................... (269,000) --
Depreciation differences between financial and tax
accounting............................................. (20,000) (1,266)
--------- -----------
(289,000) (1,266)
--------- -----------
Net non-current deferred tax liabilities.................... $(260,700) $ --
========= ===========
</TABLE>
The Company's net operating loss carryforward will expire in 2013.
8. BOND GUARANTEES
Most of the Company's business activities are performed under contract
agreements with customers which require bond guarantees from an independent
surety company. As is customary in the construction industry, the Company has
pledged all of its assets in order to indemnify the surety company against
losses under these bond guarantees.
9. RELATED PARTY TRANSACTIONS
During the year ended June 30, 1996, the Company bought back 418 shares of
its stock which was owned by a principal stockholder. The buy-back of stock was
accomplished by providing an unsecured promissory note for $138,063 payable upon
demand, which accrued interest at the rate of 10% per annum.
F-84
<PAGE> 214
CORD COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
9. RELATED PARTY TRANSACTIONS -- (CONTINUED)
During the year ended June 30, 1998, the Company paid the remaining principal
balance outstanding at June 30, 1997 of $87,402.
The Company leases equipment from a principal stockholder. Lease payments
for the years ended June 30, 1998 and 1997 were $57,600 and $78,920,
respectively. Amounts included in accounts payable that were due to the
stockholder for equipment rental were $0 and $22,200 at June 30, 1998 and 1997,
respectively.
On June 30, 1995, the Company had an outstanding unsecured note receivable
from a stockholder, which it had received in exchange for the issuance of common
stock. The note is payable upon demand and accrues interest at the rate of 10%
per annum. The Company received payments of principal and interest of $0 and
$30,820 at June 30, 1998 and 1997, respectively. The remaining principal balance
owed the Company at June 30, 1998 and 1997 was $60,598. The Company's accrued
interest balance at June 30, 1998 and 1997 was $14,410 and $7,744, respectively.
10. DEFINED CONTRIBUTION PENSION PLAN
Effective January 1997, the Company adopted a 401(k) retirement plan that
covers all employees who have completed one year of service and are at least 21
years of age. The Company's contributions, which are discretionary, are
allocated to participants based on a percentage of wages. Participants may also
make elective contributions. Employer pension expense for the year ended June
30, 1998 and 1997 totaled $28,409 and $0, respectively.
11. DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:
Cash, accounts receivable, accounts payable, and other current
liabilities -- At June 30, 1998, carrying amounts of these financial instruments
approximate fair value because of their short maturities.
Long term debt and capital lease obligations -- At June 30, 1998, estimated
fair value of long-term debt approximates the carrying amount of $92,663, based
on current rates offered for similar debt.
12. YEAR 2000 COMPLIANCE
The Company is conducting a review of its computer and other systems to
identify those areas that could be affected by the "Year 2000" issue and is
developing an implementation plan to resolve the issue. The Company is currently
working with consultants who believe, with modifications to existing software
and converting to new software and hardware, the Year 2000 problem will not pose
significant operational problems and is not anticipated to be material to its
financial position or results of operations in any given year.
13. SUBSEQUENT EVENTS
On September 1, 1998, the Company's line of credit was paid in full and
canceled.
On August 31, 1998, the stockholders of CORD Communications sold all of the
outstanding shares of stock to Westower Corporation in exchange for $5,000,000
in cash and 217,389 shares of Westower stock.
F-85
<PAGE> 215
CORD COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
13. SUBSEQUENT EVENTS -- (CONTINUED)
The stockholders can receive 347,826 additional shares contingent on the
performance of CORD Communications during the twelve months following the
purchase. The purchase agreement also provides that Westower will support CORD's
need for additional working capital during the twelve months following the
purchase. Westower is a larger cellular tower contractor and operator, and is
planning to bring its additional marketing, operational and capital resources to
CORD Communications in order to grow and enhance the Company's business
activities.
F-86
<PAGE> 216
REPORT OF INDEPENDENT ACCOUNTANTS
To the Members of
Summit Communications, LLC
In our opinion, the accompanying balance sheet and the related statements
of income, members' equity and cash flows present fairly, in all material
respects, the financial position of Summit Communications, LLC at September 30,
1998, and the results of its operations and its cash flows for the nine months
ended September 30, 1998, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for the opinion expressed
above. The financial statements of Summit Communications, LLC for the Period of
Inception (May 24, 1997) to December 31, 1997 were audited by other independent
accountants whose report dated March 5, 1998 expressed an unqualified opinion on
those statements.
/s/ PricewaterhouseCoopers LLP
Seattle, Washington
May 21, 1999
F-87
<PAGE> 217
REPORT OF INDEPENDENT ACCOUNTANTS
To the Members of
Summit Communications, LLC
Ridgeland, Mississippi
We have audited the accompanying balance sheet of Summit Communications,
LLC, as of December 31, 1997 and the related statements of income, members'
equity and cash flows for the Period of Inception (May 24, 1997) 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audit provides a reasonable basis for our opinion.
In our opinion the financial statements referred to above present fairly,
in all material respects, the financial position of Summit Communications, LLC
as of December 31, 1997, the results of its operations and its cash flows for
the Period of Inception (May 24, 1997) to December 31, 1997, in conformity with
generally accepted accounting principles.
/s/ Shearer, Taylor & Co., P.A.
March 5, 1998
Jackson, Mississippi
F-88
<PAGE> 218
SUMMIT COMMUNICATIONS, LLC
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C>
ASSETS
Current assets
Cash...................................................... $ 541,850
Accounts receivable....................................... $1,142,771 2,791,203
Costs and estimated earnings in excess of billings on
uncompleted
contracts.............................................. 117,648 411,766
Note receivable from member............................... 155,000
Other current assets...................................... 60,949 98,088
---------- ----------
Total current assets........................................ 1,321,368 3,997,907
---------- ----------
Property and equipment
Machinery and equipment................................... 479,459 568,336
Vehicles.................................................. 398,916 529,734
Furniture and fixtures.................................... 17,292 24,104
---------- ----------
895,667 1,122,174
Less: Accumulated depreciation............................ (196,346) (384,547)
---------- ----------
Property and equipment, net............................ 699,321 737,627
---------- ----------
Other assets................................................ 19,671 18,421
---------- ----------
$2,040,360 $4,753,955
========== ==========
LIABILITIES AND MEMBERS' EQUITY
Liabilities
Current liabilities
Book overdraft......................................... $ 118,249
Accounts payable....................................... 183,876 $1,361,357
Billings in excess of costs and estimated earnings on
uncompleted contracts................................. 265,520 532,608
Accrued expenses and other liabilities................. 84,266 225,356
Line of credit......................................... 116,537 442,144
Note payable to member................................. 388,938
Current portion of capital lease obligations........... 14,917 65,630
Current portion of long-term debt...................... 52,041 125,802
---------- ----------
Total current liabilities................................... 1,224,344 2,752,897
Capital lease obligations, less current portion............. 18,881 126,697
Long-term debt, less current portion........................ 231,053 469,989
---------- ----------
Total liabilities........................................... 1,474,278 3,349,583
---------- ----------
Commitments and contingencies
Members' equity............................................. 566,082 1,404,372
---------- ----------
$2,040,360 $4,753,955
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-89
<PAGE> 219
SUMMIT COMMUNICATIONS, LLC
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
PERIOD
OF INCEPTION
(MAY 24, 1997) NINE MONTHS
TO ENDED
DECEMBER 31, SEPTEMBER 30,
1997 1998
--------------- -------------
<S> <C> <C>
Contract revenues earned.................................... $5,477,770 $8,334,650
---------- ----------
Cost of contract revenues (exclusive of depreciation and
amortization shown below)
Materials, supplies and contract services................. 2,519,761 3,992,685
Direct labor.............................................. 867,387 1,261,849
Other direct costs........................................ 726,241 1,031,938
---------- ----------
Total cost of contract revenues............................. 4,113,389 6,286,472
---------- ----------
Gross margin................................................ 1,364,381 2,048,178
---------- ----------
Selling, general and administrative expenses................ 645,953 922,198
Depreciation and amortization............................... 197,061 196,616
---------- ----------
Income from operations...................................... 521,367 929,364
Other income (expense)
Other income, net......................................... 1,533
Interest expense.......................................... (45,285) (92,607)
---------- ----------
Net income.................................................. $ 476,082 $ 838,290
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-90
<PAGE> 220
SUMMIT COMMUNICATIONS, LLC
STATEMENT OF MEMBERS' EQUITY
<TABLE>
<S> <C>
Capital contributions (May 24, 1997)........................ $ 100,000
Net income.................................................. 476,082
Distributions to members.................................... (10,000)
----------
December 31, 1997........................................... 566,082
Net income.................................................. 838,290
September 30, 1998.......................................... $1,404,372
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-91
<PAGE> 221
SUMMIT COMMUNICATIONS, LLC
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD
OF INCEPTION
(MAY 24, 1997) NINE MONTHS
TO ENDED
DECEMBER 31, SEPTEMBER 30,
1997 1998
-------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 476,082 $ 838,290
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH FLOWS FROM
OPERATING ACTIVITIES:
Depreciation and amortization.......................... 197,061 196,616
Loss on disposal of assets............................. 15,520
CHANGES IN OPERATING ASSETS AND LIABILITIES, NET OF
EFFECT OF ACQUISITION:
Accounts receivable.................................. (1,142,771) (1,648,432)
Cost and estimated earnings in excess of billings on
uncompleted contracts............................... (117,648) (294,118)
Other current assets................................. (37,189) (37,139)
Accounts payable..................................... 183,876 1,177,481
Billings in excess of costs and estimated earnings on
uncompleted contracts............................... 265,520 267,088
Accrued expenses and other liabilities............... 6,253 141,090
----------- -----------
Net cash (used in) provided by operating activities......... (168,816) 656,396
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for acquisition................................. (512,207)
Purchases of property and equipment....................... (13,865) (577,476)
Proceeds from disposals of property and equipment......... 501,670
----------- -----------
Net cash used in investing activities....................... (526,072) (75,806)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances to member........................................ (155,000)
Proceeds from line of credit, net......................... 116,537 325,607
Proceeds from note payable to member...................... 400,000
Repayments of note payable to member...................... (11,062) (10,741)
Repayments of capital lease obligations................... (301,930) (14,857)
Proceeds from long-term debt.............................. 300,174 500,000
Repayments of long-term debt.............................. (17,080) (565,500)
Increase (decrease) in book overdraft..................... 118,249 (118,249)
Capital contributions..................................... 100,000
Distributions to members.................................. (10,000)
----------- -----------
Net cash provided by (used in) financing activities......... 694,888 (38,740)
----------- -----------
Net increase in cash........................................ 541,850
Cash at beginning of period.................................
----------- -----------
Cash at end of period....................................... $ -- $ 541,850
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-92
<PAGE> 222
SUMMIT COMMUNICATIONS, LLC
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD OF INCEPTION (MAY 24, 1997) TO DECEMBER 31, 1997
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1998
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Summit Communications LLC (the "Company") is incorporated under the laws of
the state of Mississippi as a limited liability company (LLC). The Company
constructs communications towers for use by the radio, television, telephone and
other industries in the continental United States.
ACCOUNTING 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 and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Examples of estimates subject to possible revision based upon
the outcome of future events include costs and estimated earnings on uncompleted
contracts and depreciation on property and equipment. Actual results could
differ from those estimates.
REVENUE AND COST RECOGNITION
Revenues from fixed-priced and modified fixed-price construction contracts
are recognized on the percentage-of-completion method, measured by the
percentage of costs incurred to date to total estimated costs to complete each
contract. Most of the Company's contracts are short-term and are completed in
two to three months.
Contract costs include all direct material and labor costs and those direct
costs related to contract performance, such as supplies, tools and repairs.
Selling, general and administrative costs, including indirect costs on
contracts, are charged to expense as incurred. Provisions for estimated losses
on uncompleted contracts are made in the period in which such losses are
determined.
Costs and estimated earnings in excess of billings on uncompleted contracts
represents revenues recognized in excess of amounts billed. Billings in excess
of costs and estimated earnings on uncompleted contracts represents billings in
excess of revenues earned.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the assets.
Estimated useful lives by major asset category are as follows: machinery and
equipment -- 2 to 10 years; vehicles -- 3 to 5 years; furniture and
fixtures -- 3 to 7 years. Gains or losses on the dispositions of assets are
recorded at the time of disposition and are included in other income. The costs
of normal repairs and maintenance are charged to expense as incurred.
INCOME TAXES
Income of the Company is taxed directly to its members for Federal income
tax purposes. As a result, no provision for Federal income taxes has been
reflected in the accompanying financial statements.
F-93
<PAGE> 223
SUMMIT COMMUNICATIONS, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
RECLASSIFICATIONS
Certain reclassifications have been made to prior year amounts to conform
with current year presentation. These reclassifications had no effect on
previously reported results of operations, net assets, cash flows or members'
equity.
2. UNCOMPLETED CONTRACTS
The following is a summary of costs, estimated earnings and billings on
uncompleted contracts:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C>
Costs incurred on uncompleted contracts..................... $1,143,511 $2,471,585
Estimated earnings.......................................... 495,683 888,087
---------- ----------
1,639,194 3,359,672
Less: Billings to date...................................... 1,787,066 3,480,514
---------- ----------
$ (147,872) $ (120,842)
========== ==========
Presentation in the accompanying balance sheet:
Cost and estimated earnings in excess of billings on
uncompleted contracts.................................. $ 117,648 $ 411,766
Billings in excess of costs and estimated earnings on
uncompleted contracts.................................. (265,520) (532,608)
========== ==========
$ (147,872) $ (120,842)
========== ==========
</TABLE>
3. LINE OF CREDIT
Line of credit consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C>
Line of credit for $600,000 payable to commercial bank;
interest at the lender's prime rate (8.5% at December 31,
1997) plus 0.5%; principal and interest payable January 1,
1998; collateralized by inventory, property and equipment,
and accounts receivable................................... $ 57,593
Line of credit for $750,000 payable to commercial bank;
interest at the lender's prime rate, (8.5% at December 31,
1997) plus 0.5%; principal and interest payable July 1,
1998; collateralized by inventory, property and equipment,
and accounts receivable................................... 58,944
Line of credit for $750,000 payable to commercial bank;
interest at the lender's prime rate (8.25% at September
30, 1998) plus 0.25%; principal payable April 30, 1999,
interest payable monthly; collateralized by inventory,
property and equipment and accounts receivable; amended on
October 16, 1998 increasing the line of credit available
to $1,000,000 and interest to the 90 day LIBOR rate plus
2.25%..................................................... $442,144
-------- --------
$116,537 $442,144
======== ========
</TABLE>
F-94
<PAGE> 224
SUMMIT COMMUNICATIONS, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. NOTE PAYABLE TO MEMBER
Note payable to member consists of the following at December 31, 1997:
<TABLE>
<S> <C>
Note payable to member; interest at a specified commercial
bank's prime rate, 8.5% at December 31, 1997; principal
payable on July 18, 1998 and interest payable
quarterly.
$388,938
========
</TABLE>
The net proceeds of the note were used to acquire the net assets in Note
11. In April 1998, the Company refinanced the note with a note payable to a
commercial bank (see Note 5).
Interest paid to the member was approximately $17,000 and $11,000 for the
Period of Inception (May 24, 1997) to December 31, 1997 and the nine months
ended September 30, 1998, respectively.
5. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C>
Note payable to commercial bank at an interest rate of
8.5%; payable in monthly installments of $6,176,
including interest, through September 25, 2002;
collateralized by property and equipment and accounts
receivable............................................. $283,094 $ 249,221
Note payable to commercial bank at an interest rate of
8.75%; payable in monthly installments of $8,207,
including interest, through April 5, 2003;
collateralized by property and equipment and accounts
receivable............................................. 346,570
-------- ---------
283,094 595,791
Less: Current portion..................................... (52,041) (125,802)
-------- ---------
Long-term debt, less current portion...................... $231,053 $ 469,989
======== =========
</TABLE>
The following is a summary of the future aggregate amounts of principal
payments for long-term debt at September 30, 1998:
<TABLE>
<S> <C>
Three months ending December 31, 1998....................... $ 30,443
1999........................................................ 128,542
2000........................................................ 140,099
2001........................................................ 152,696
2002........................................................ 144,011
---------
595,791
Less: Current portion....................................... (125,802)
---------
$ 469,989
=========
</TABLE>
F-95
<PAGE> 225
SUMMIT COMMUNICATIONS, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. CAPITAL LEASE OBLIGATIONS
The following is a summary of future minimum lease payments under capital
lease agreements at September 30, 1998:
<TABLE>
<S> <C>
Three months ending December 31, 1998....................... $ 22,933
1999........................................................ 70,699
2000........................................................ 65,529
2001........................................................ 62,712
--------
Total minimum lease payments.............................. 221,873
Less: Amount representing interest.......................... (29,546)
--------
$192,327
========
</TABLE>
The following is a summary of assets and accumulated depreciation of assets
under capital lease agreements as of:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C>
Vehicles.................................................... $54,397 $138,697
Machinery................................................... 92,473
------- --------
54,397 231,170
Less: Accumulated depreciation.............................. (6,802) (21,463)
------- --------
$47,595 $209,707
======= ========
</TABLE>
Depreciation expense includes amortization of assets under capital leases
of $6,802 and $18,811 for the Period of Inception (May 24, 1997) to December 31,
1997 and for the nine months ended September 30, 1998, respectively.
7. EMPLOYEE BENEFIT PLAN
The Company has a defined contribution employee benefit plan, which is the
401(k) Profit Sharing Plan and Trust. Employees become eligible for
participation in the plan after one year of service. Employees may contribute a
percentage of their gross compensation not to exceed certain limits.
Contributions by the Company are made at the discretion of the members. There
were no contributions made by the Company related to this plan for the Period of
Inception (May 24, 1997) to December 31, 1997 and for the nine months ended
September 30, 1998.
8. RELATED PARTY TRANSACTIONS
NOTE RECEIVABLE
At September 30, 1998, the Company had a note receivable for $155,000 from
one of its members. The note bears interest at the same rate as the line of
credit, is payable on demand, and is uncollateralized. The note was subsequently
repaid in full.
SALE OF BUILDINGS
In February 1998, the Company acquired a building from one of the members
for $500,000. In July 1998 the building was sold to the members resulting in a
loss of approximately $12,000.
F-96
<PAGE> 226
SUMMIT COMMUNICATIONS, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. RELATED PARTY TRANSACTIONS -- (CONTINUED)
FACILITY LEASES
The Company leases space in two buildings owned by the members of the
Company under a month to month operating lease. For the nine months ended
September 30, 1998, total rent paid to the members was approximately $9,300.
9. CONTINGENCIES
The Company is subject to lawsuits and other legal claims in the normal
course of its operations. Management believes that the resolution of any such
lawsuits and legal claims, if any, will not have a material impact on the
Company's financial position, results of operations or cash flows.
10. CREDIT RISK AND BUSINESS CONCENTRATIONS
Financial instruments that potentially subject the Company to
concentrations of credit consist primarily of cash and accounts receivable. The
Company deposits its cash with a major financial institution. At times, deposits
may exceed federally insured limits. The Company extends credit to customers
based on evaluation of the customer's financial condition and credit history.
Collateral is generally not required. Customers include large U.S. companies
concentrated in the telecommunications industry.
Contract revenues earned from three customers accounted for 54% of revenues
for the Period of Inception (May 24, 1997) to December 31, 1997. Accounts
receivable from these three customers comprise 53% of accounts receivable at
December 31, 1997. Contract revenues earned from two customers accounted for 58%
of revenues for the nine months ended September 30, 1998. Accounts receivable
from these two customers comprise 57% of accounts receivable at September 30,
1998.
Management expects that sales to relatively few customers will continue to
account for a high percentage of its revenues into the foreseeable future and
believes that financial results depend in significant part upon the success of
these customers. Although the composition of the group comprising the Company's
largest customers may vary from period to period, the loss of a significant
customer or reduction in orders by any significant customers, including
reductions due to market, economic or competitive conditions in the wireless
communications industry, may have an adverse effect on the Company's business,
financial condition and results of operations.
F-97
<PAGE> 227
SUMMIT COMMUNICATIONS, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
11. ACQUISITION
On May 24, 1997, the Company acquired certain assets and assumed certain
liabilities of Summit Communications, Inc. (SCI), an unrelated third party, in a
purchase transaction. The following is a summary of assets acquired and
liabilities assumed in the SCI transaction:
<TABLE>
<S> <C>
Assets acquired
Other current assets...................................... $ 23,760
Property and equipment.................................... 855,896
Other assets.............................................. 20,386
--------
900,042
Liabilities assumed
Long-term debt............................................ 293,634
Capital lease obligations................................. 16,188
Accrued expenses and other liabilities.................... 78,013
--------
387,835
--------
Cash paid.............................................. $512,207
========
</TABLE>
12. SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
PERIOD
OF INCEPTION
(MAY 24, 1997) NINE MONTHS
TO ENDED
DECEMBER 31, SEPTEMBER 30,
1997 1998
-------------- -------------
<S> <C> <C>
Interest paid............................................. $42,644 $ 95,248
Non-cash investing and financing activities:
Vehicles and machinery acquired under capital leases.... $25,905 $173,386
Note payable to member refinanced with commercial
bank................................................. $378,197
</TABLE>
13. SUBSEQUENT EVENTS
On November 10, 1998 the members sold all of their outstanding ownership
interest in the Company to Westower Corporation (Westower), a publicly traded
company, in exchange for approximately 200,000 shares of Westower and $4.4
million in cash. The members may also receive an additional 100,000 shares of
Westower common stock based upon certain performance criteria during the three
years subsequent to the date of acquisition. The purchase agreement also
provides that Westower will supply the Company's need for additional working
capital following the purchase.
On May 15, 1999, Westower entered into a definitive agreement with
Spectrasite Holdings, Inc. (Spectrasite), under which Westower will merge with a
subsidiary of Spectrasite. Under the terms of the agreement, Westower
shareholders will receive 1.81 shares of Spectrasite common stock for each
Westower share and Westower will become a wholly owned subsidiary of
Spectrasite. The merger is subject to the approval of Westower's shareholders
and the appropriate regulatory agencies as well as other customary closing
conditions. There can be no assurance that the merger will be consummated.
F-98
<PAGE> 228
[SPECTRASITE LOGO]
<PAGE> 229
[SPECTRASITE LOGO]
Alternate Cover Page
PROSPECTUS
[DATE OF EFFECTIVENESS]
SPECTRASITE HOLDINGS, INC.
10 3/4% SENIOR NOTES DUE 2010
12 7/8% SENIOR DISCOUNT NOTES DUE 2010
CIBC World Markets Corp. will use this prospectus in connection with offers
and sales of the notes related to market-making transactions in the
over-the-counter market at negotiated prices related to prevailing market prices
at the time of sale. SpectraSite Holdings, Inc. will not receive any of the
proceeds of such sales. CIBC World Markets Corp. may act as principal or agent
in such transactions. The closing of the exchange offer, which constituted the
delivery of the registered notes in place of the outstanding notes, occurred on
, 2000. See "Plan of Distribution."
SPECTRASITE:
- - We are one of the leading providers of outsourced antennae site and network
services to the wireless communications and broadcast industries in the United
States and Canada. Our businesses include the ownership and leasing of
antennae sites on towers, managing rooftop and in-building telecommunications
access on commercial real estate, network planning and deployment, and
construction of towers and related wireless facilities.
- - SpectraSite Holdings, Inc. 100 Regency Forest Drive, Suite 400, Cary, North
Carolina 27511 (919) 468-0112
TRADING FORMAT:
- - The PORTAL market, in the over-the-counter market, negotiated transactions or
through a combination of such methods.
THE NOTES:
- - Maturity Date: March 15, 2010.
- - Discount Notes Accreted Value and Interest: the registered discount notes will
accrete at a daily rate of 12.875% per year, compounded semiannually, to an
aggregate principal amount of $559,800,000 by March 15, 2005. Cash interest
will begin to accrue on March 15, 2005, and we will pay cash interest on
September 15, 2005, and on each March 15 and September 15 thereafter, at a
rate of 12.875% per year.
- - Cash Notes Interest: Cash interest began to accrue at an annual rate of
10.750% on March 15, 2000, payable semi-annually in arrears on March 15 and
September 15, commencing September 15, 2000.
- - Redemption: We may redeem the notes on or after March 15, 2003. We may redeem
up to 35% of the notes prior to March 15, 2003 with net proceeds from one or
more public equity offerings.
- - Ranking: The notes are general, unsecured obligations of SpectraSite Holdings,
Inc. and:
- rank equally in right of payment to all existing and future senior
indebtedness of Holdings; and
- are effectively subordinated to all existing and future indebtedness and
other liabilities of Holdings' subsidiaries.
THIS INVESTMENT INVOLVES RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 10.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
CIBC WORLD MARKETS CORP.
<PAGE> 230
ALTERNATE USE OF PROCEEDS
This prospectus is delivered in connection with the sale of the notes by
CIBC World Markets Corp. in market-making transactions. SpectraSite will not
receive any of the proceeds from those transactions.
<PAGE> 231
ALTERNATE PLAN OF DISTRIBUTION
This prospectus is to be used by CIBC World Markets Corp. in connection
with offers and sales of the notes in market-making transactions in the
over-the-counter market at negotiated prices related to prevailing market prices
at the time of sale. CIBC World Markets Corp. may act as principal or agent in
such transactions, has no obligation to make a market in the registered notes
and may discontinue its market-making activities at any time without notice, at
its sole discretion. There is currently no trading market for the notes. We
cannot assure you as to the development or liquidity of any trading market for
the notes.
We have agreed to indemnify jointly and severally CIBC World Markets Corp.
against certain liabilities, including liabilities under the Securities Act, or
to contribute to payments that CIBC World Markets Corp. may be required to make
in that regard.
Affiliates of CIBC World Markets Corp. beneficially own approximately 8% of
Holdings' capital stock. In addition, Andrew R. Heyer, a Managing Director of
CIBC World Markets Corp., serves on Holdings' board of directors.
CIBC World Markets Corp. and its affiliates have provided investment
banking and other financial services to us in the past and may do so in the
future. In addition, CIBC World Markets Corp. and an affiliate are lenders and
an agent under our credit facility and have received customary fees for acting
in such capacities.
<PAGE> 232
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>
2.1 Agreement and Plan of Merger, dated as of February 10, 1999,
among Nextel Communications, Inc., Tower Parent Corp., Tower
Merger Vehicle, Inc., Tower Asset Sub, Inc., SpectraSite
Holdings, Inc. (the "Registrant"), SpectraSite
Communications, Inc. and SHI Merger Sub, Inc. (the "Nextel
Merger Agreement"). Incorporated by reference to the
corresponding exhibit to the Registrant's registration
statement on Form S-4, file no. 333-67403
2.2 Amendment No. 1 to the Nextel Merger Agreement. Incorporated
by reference to the corresponding exhibit to the
Registrant's registration statement on Form S-4, file no.
333-67403
2.3 Agreement and Plan of Merger among Westower Corporation, the
Registrant and W Acquisition Corp., dated as of May 15,
1999. Incorporated by reference to the corresponding exhibit
to the Registrant's registration statement on Form S-4, file
no. 333-67403
2.4 Merger Agreement and Plan of Reorganization, dated as of
November 24, 1999, among the Registrant, Apex Merger Sub,
Inc. and Apex Site Management Holdings, Inc. (the "Apex
Merger Agreement"). Incorporated by reference to the
corresponding exhibit to the Registrant's registration
statement on Form S-1, file no. 333-93873
2.5 Stock Purchase Agreement, dated as of December 30, 1999,
between Northwest Broadcasting, L.P. and the Registrant.
Incorporated by reference to the corresponding exhibit to
the Registrant's registration statement on Form S-1, file
no. 333-93873
2.6 Stock Purchase Agreement, dated as of December 30, 1999,
among Donald Doty, John Patrick Moore and the Registrant.
Incorporated by reference to the corresponding exhibit to
the Registrant's registration statement on Form S-1, file
no. 333-93873
</TABLE>
II-1
<PAGE> 233
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
2.7 Merger Agreement and Plan of Reorganization, dated as of
December 30, 1999, among the Registrant, VPI Merger Sub,
Inc., Vertical Properties, Inc. and the stockholders of
Vertical Properties, Inc. Incorporated by reference to the
corresponding exhibit to the Registrant's registration
statement on Form S-1, file no. 333-93873
2.8 Asset Purchase Agreement, dated as of January 5, 2000, among
International Towers, Inc., S&W Communications, Inc., Tri-Ex
Tower, Inc., International Tower Industries Inc. and the
Registrant. Incorporated by reference to the corresponding
exhibit to the Registrant's report on Form 8-K filed on
January 21, 2000
2.9 Agreement to Sublease, dated as of February 16, 2000, by and
between AirTouch Communications, Inc. and the Other Parties
Named Therein as Sublessors, California Tower, Inc. and the
Registrant. Incorporated by reference to the corresponding
exhibit to the Registrant's Form 10-K for the year ended
December 31, 1999
2.10 Stock Purchase Agreement, dated as of April 12, 2000, by and
between SpectraSite Communications, Inc. and LeBlanc &
Royale Enterprises Inc. Incorporated by reference to exhibit
2.1 of the Registrant's report on Form 8-K filed on April
18, 2000
2.11 Joint Venture Shareholders' Agreement, dated as of April 13,
2000, by and among SpectraSite International, Inc., Transco
Telecommunications Asset Development Company Limited and
EVER 1267 Limited. Incorporated by reference to exhibit 2.2
of the Registrant's report on Form 8-K filed on April 18,
2000
3.1 Certificate of Incorporation of Integrated Site Development
("ISD"), dated and filed as of April 25, 1997. Incorporated
by reference to the corresponding exhibit to the
Registrant's registration statement on Form S-4, file no.
333-67403
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. Incorporated by
reference to the corresponding exhibit to the Registrant's
registration statement on Form S-4, file no. 333-67403
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. Incorporated by reference to the corresponding
exhibit to the Registrant's registration statement on Form
S-4, file no. 333-67403
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.). Incorporated by
reference to the corresponding exhibit to the Registrant's
registration statement on Form S-4, file no. 333-67403
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). Incorporated by
reference to the corresponding exhibit to the Registrant's
registration statement on Form S-4, file no. 333-67403
3.6 Certificate of Amendment of the Certificate of Incorporation
of the Registrant, dated as of May 29, 1998 and filed June
2, 1998. Incorporated by reference to the corresponding
exhibit to the Registrant's registration statement on Form
S-4, file no. 333-67403
3.7 Certificate of Amendment of the Certificate of Incorporation
of the Registrant, dated as of August 18, 1998 and filed
August 19, 1998. Incorporated by reference to the
corresponding exhibit to the Registrant's registration
statement on Form S-4, file no. 333-67403
3.8 Amended Bylaws of SpectraSite Holdings, Inc. Incorporated by
reference to the corresponding exhibit to the Registrant's
registration statement on Form S-1, file no. 333-93873
3.9 Amended and Restated Certificate of Incorporation of the
Registrant. Incorporated by reference to the corresponding
exhibit to the Registrant's registration statement on Form
S-4, file no. 333-67403
</TABLE>
II-2
<PAGE> 234
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
3.10 Certificate of Amendment to the Amended and Restated
Certificate of Incorporation of the Registrant, dated August
31, 1999. Incorporated by reference to the corresponding
exhibit to the Registrant's report on Form 8-K, dated
September 2, 1999 and filed September 17, 1999
4.1 Indenture, dated as of June 26, 1998, between the Registrant
and United States Trust Company of New York, as trustee.
Incorporated by reference to the corresponding exhibit to
the Registrant's registration statement on Form S-4, file
no. 333-67403
4.2 First Supplemental Indenture, dated as of March 25, 1999,
between the Registrant and United States Trust Company of
New York, as trustee. Incorporated by reference to the
corresponding exhibit to the Registrant's registration
statement on Form S-4, file no. 333-67403
4.3 Indenture, dated as of April 20, 1999, between the
Registrant and United States Trust Company of New York, as
trustee. Incorporated by reference to the corresponding
exhibit to the Registrant's registration statement on Form
S-4, file no. 333-67403
4.4 Indenture, dated as of March 15, 2000, between the
Registrant and United States Trust Company of New York, as
trustee (10 3/4% senior notes)
4.5 Indenture, dated as of March 15, 2000, between the
Registrant and United States Trust Company of New York, as
trustee (12 7/8% senior discount notes)
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, III
("Kitty Hawk III") and ISD. Incorporated by reference to the
corresponding exhibit to the Registrant's registration
statement on Form S-4, file no. 333-67403
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"). Incorporated by reference to the corresponding
exhibit to the Registrant's registration statement on Form
S-4, file no. 333-67403
10.3 First Amendment to Stock Purchase Agreement (Series B
Preferred Stock), dated as of May 29, 1998. Incorporated by
reference to the corresponding exhibit to the Registrant's
registration statement on Form S-4, file no. 333-67403
10.4 Second Amendment to Stock Purchase Agreement (Series B
Preferred Stock), dated as of August 27, 1998. Incorporated
by reference to the corresponding exhibit to the
Registrant's registration statement on Form S-4, file no.
333-67403
10.5 Second Amended and Restated Registration Rights Agreement,
dated as of April 20, 1999, by and among the Registrant,
Whitney Equity, Whitney III, Whitney Strategic,
Waller-Sutton, Kitty Hawk III, Kitty Hawk IV, Eagle Creek,
NCEF, Finley LP, certain affiliates of CIBC Oppenheimer
Corp. (the "CIBC Purchasers"), certain affiliates and
employees of Welsh Carson Anderson & Stowe (the "WCAS
Purchasers"), Tower Parent Corp., Gupton, Eckert, Jackman,
Edward J. Lutkewich ("Lutkewich"), Stephen H. Clark
("Clark") and David P. Tomick ("Tomick"). Incorporated by
reference to the corresponding exhibit to the Registrant's
registration statement on Form S-4, file no. 333-67403
</TABLE>
II-3
<PAGE> 235
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
10.6 Third Amended and Restated Stockholders' Agreement, dated as
of April 20, 1999, by and among the Registrant, Whitney
Equity, Whitney III, Whitney Strategic, Waller-Sutton, Kitty
Hawk III, Kitty Hawk IV, Eagle Creek, Clark, Tomick, Finely
LP, NCEF, the CIBC Purchasers, the WCAS Purchasers, Tower
Parent Corp., Lutkewich, Jackman, Eckert and Gupton.
Incorporated by reference to the corresponding exhibit to
the Registrant's registration statement on Form S-4, file
no. 333-67403
10.7 Employment Agreement with Clark. Incorporated by reference
to the corresponding exhibit to the Registrant's
registration statement on Form S-4, file no. 333-67403
10.8 Employment Agreement with Tomick. Incorporated by reference
to the corresponding exhibit to the Registrant's
registration statement on Form S-4, file no. 333-67403
10.9 Employment Agreement with Richard J. Byrne. Incorporated by
reference to the corresponding exhibit to the Registrant's
registration statement on Form S-4, file no. 333-67403
10.10 Credit Agreement, dated as of April 20, 1999, by and among
the Registrant, SCI, CIBC Oppenheimer Corp., Credit Suisse
First Boston Corporation and the other parties thereto (the
"Credit Agreement"). Incorporated by reference to exhibit
no. 10.1 to the Registrant's registration statement on Form
8-A filed on September 1, 1999
10.11 SpectraSite Holdings, Inc. Stock Incentive Plan.
Incorporated by reference to exhibit no. 10.16 to the
Registrant's registration statement on Form S-4, file no.
333-67403
10.12 SpectraSite Holdings, Inc. Employee Stock Purchase Plan.
Incorporated by reference to exhibit no. 10.17 to the
Registrant's registration statement on Form S-4, file no.
333-67403
10.13 Agreement, dated September 15, 1998, by and between Robert
M. Long and the Registrant. Incorporated by reference to
exhibit no. 10.22 to the Registrant's registration statement
on Form S-4, file no. 333-67403
10.14 Asset Purchase Agreement, dated as of August 14, 1998, by
and among Airadigm Communications, Inc. ("Airadigm") and
SCI. Incorporated by reference to exhibit no. 10.23 to the
Registrant's registration statement on Form S-4, file no.
333-67403
10.15 Form of Master Tower Attachment Lease Agreement by and
between Airadigm and SCI. Incorporated by reference to
exhibit no. 10.24 to the Registrant's registration statement
on Form S-4, file no. 333-67403
10.16 Asset Purchase Agreement, dated as of August 20, 1998, by
and among Amica Wireless Phone Service, Inc. ("Amica") and
SCI. Incorporated by reference to exhibit no. 10.25 to the
Registrant's registration statement on Form S-4, file no.
333-67403
10.17 Form of Master Design Build Lease Agreement by and between
Amica and SCI. Incorporated by reference to exhibit no.
10.26 to the Registrant's registration statement on Form
S-4, file no. 333-67403
10.18 Preferred Stock Purchase Agreement (Series C Preferred
Stock), dated as of February 10, 1999, by and among the
Registrant, the WCAS Purchasers, the Whitney Purchasers, the
CIBC Purchasers and the Additional Purchasers. Incorporated
by reference to exhibit no. 10.30 to the Registrant's
registration statement on Form S-4, file no. 333-67403
10.19 First Amendment to Preferred Stock Purchase Agreement
(Series C Preferred Stock). Incorporated by reference to
exhibit no. 10.31 to the Registrant's registration statement
on Form S-4, file no. 333-67403
10.20 Security & Subordination Agreement, dated as of April 20,
1999. Incorporated by reference to exhibit no. 10.32 to the
Registrant's registration statement on Form S-4, file no.
333-67403
10.21 Master Site Commitment Agreement, dated as of April 20,
1999. Incorporated by reference to exhibit no. 10.33 to the
Registrant's registration statement on Form S-4, file no.
333-67403
</TABLE>
II-4
<PAGE> 236
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
10.22 Master Site Lease Agreement, dated as of April 20, 1999.
Incorporated by reference to exhibit no. 10.34 to the
Registrant's registration statement on Form S-4, file no.
333-67403
10.23 Employment Agreement with Calvin J. Payne. Incorporated by
reference to exhibit 10.1 to the Registrant's report on Form
8-K, dated September 2, 1999 and filed September 17, 1999
10.24 Joinder Agreement to SpectraSite Restated Registration
Rights Agreement. Incorporated by reference to exhibit no.
10.36 to the Registrant's registration statement on Form
S-1, file no. 333-93873
10.25 First Amendment to Credit Agreement, dated as of August 23,
1999. Incorporated by reference to exhibit 10.2 to the
Registrant's report on Form 8-K, dated September 2, 1999 and
filed September 17, 1999
10.26 Second Amendment to Credit Agreement, dated as of December
22, 1999. Incorporated by reference to the corresponding
exhibit to the Registrant's Form 10-K for the year ended
December 31, 1999
10.27 Third Amendment to Credit Agreement, dated as of February
14, 2000. Incorporated by reference to the corresponding
exhibit to the Registrant's Form 10-K for the year ended
December 31, 1999
10.28 Fourth Amendment to Credit Agreement, dated as of March 9,
2000
12.1 Computation of Ratio of Earnings to Fixed Charges
21.1 Subsidiaries of the Registrant
23.1 Consent of Ernst & Young LLP
23.2 Consent of Dow, Lohnes & Albertson, PLLC (contained in
Exhibit 5.1)
23.3 Consent of PricewaterhouseCoopers, LLP
23.4 Consent of Moss Adams LLP
23.5 Consent of Lamn, Krielow, Dytrych & Co. (formerly, Lamn,
Krielow, Dytrych & Darling)
23.6 Consent of Shearer, Taylor & Co., P.A.
25.1 Form T-1 for the indenture governing the 10 3/4% senior
notes (Statement of Eligibility of Trustee)
25.2 Form T-1 for the indenture governing the 12 7/8% senior
discount notes (Statement of Eligibility of Trustee)
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
</TABLE>
(b) Reports on Form 8-K filed during the quarter ended December 31, 1999:
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 (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 SEC pursuant to Rule 424(b) if, in the aggregate, the changes
in
II-5
<PAGE> 237
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-6
<PAGE> 238
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 APRIL 18, 2000.
SPECTRASITE HOLDINGS, INC.
By: /s/ STEPHEN H. CLARK
------------------------------------
Stephen H. Clark
President, Chief Executive Officer
and Director
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 President, Chief Executive Officer and April
- ------------------------------------------ Director (Principal Executive Officer) 18,
Stephen H. Clark 2000
/s/ DAVID P. TOMICK Executive Vice President, Chief April
- ------------------------------------------ Financial Officer and Secretary 18,
David P. Tomick (Principal Financial Officer) 2000
/s/ DANIEL I. HUNT Vice President -- Finance and April
- ------------------------------------------ Administration 18,
Daniel I. Hunt (Principal Accounting Officer) 2000
/s/ LAWRENCE B. SORREL Chairman of the Board of Directors April
- ------------------------------------------ 18,
Lawrence B. Sorrel 2000
/s/ TIMOTHY M. DONAHUE Director April
- ------------------------------------------ 18,
Timothy M. Donahue 2000
/s/ ANDREW R. HEYER Director April
- ------------------------------------------ 18,
Andrew R. Heyer 2000
/s/ JAMES R. MATTHEWS Director April
- ------------------------------------------ 18,
James R. Matthews 2000
/s/ THOMAS E. MCINERNEY Director April
- ------------------------------------------ 18,
Thomas E. McInerney 2000
/s/ MICHAEL J. PRICE Director April
- ------------------------------------------ 18,
Michael J. Price 2000
</TABLE>
II-7
<PAGE> 239
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ STEVEN M. SHINDLER Director April
- ------------------------------------------ 12,
Steven M. Shindler 2000
/s/ MICHAEL R. STONE Director April
- ------------------------------------------ 18,
Michael R. Stone 2000
/s/ CALVIN J. PAYNE Director April
- ------------------------------------------ 18,
Calvin J. Payne 2000
</TABLE>
II-8
<PAGE> 240
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
4.4 Indenture governing the 10 3/4% senior notes
4.5 Indenture governing the 12 7/8% senior notes
5.1 Opinion of Dow, Lohnes & Albertson, PLLC
10.28 Fourth Amendment to Credit Agreement, dated as of March 9,
2000
12.1 Computation of Ratio of Earnings to Fixed Charges
21.1 Subsidiaries of the Registrant
23.2 Consent of Ernst & Young LLP
23.3 Consent of PricewaterhouseCoopers LLP
23.4 Consent of Moss Adams LLP
23.5 Consent of Lamn, Krielow, Dytrych & Co. (formerly, Lamn,
Krielow, Dytrych & Darling)
23.6 Consent of Shearer, Taylor & Co., P.A.
25.1 Form T-1 for the indenture governing the 10 3/4% senior
notes (Statement of Eligibility of Trustee)
25.2 Form T-1 for the indenture governing the 12 7/8% senior
discount notes (Statement of Eligibility of Trustee)
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
</TABLE>
<PAGE> 1
EXHIBIT 4.4
SPECTRASITE HOLDINGS, INC.
as Issuer
and
UNITED STATES TRUST COMPANY OF NEW YORK
as Trustee
INDENTURE
Dated as of March 15, 2000
10 3/4% Senior Notes due 2010
<PAGE> 2
i
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions 2
SECTION 1.2. Other Definitions 20
SECTION 1.3. Incorporation by Reference of Trust Indenture Act 21
SECTION 1.4. Rules of Construction 21
SECTION 1.5. One Class of Notes 22
ARTICLE II
THE NOTES
SECTION 2.1. Form and Dating 22
SECTION 2.2. Execution and Authentication 22
SECTION 2.3. Registrar and Paying Agent 23
SECTION 2.4. Paying Agent to Hold Money in Trust 23
SECTION 2.5. Noteholder Lists 24
SECTION 2.6. [Intentionally Omitted] 24
SECTION 2.7. Replacement Notes 24
SECTION 2.8. Outstanding Notes 25
SECTION 2.9. Temporary Notes 25
SECTION 2.10. Cancellation 25
SECTION 2.11. Defaulted Interest 26
SECTION 2.12. CUSIP Numbers 26
ARTICLE III
REDEMPTION
SECTION 3.1. Notices to Trustee 26
SECTION 3.2. Selection of Notes to Be Redeemed 26
SECTION 3.3. Notice of Redemption 26
SECTION 3.4. Effect of Notice of Redemption 27
SECTION 3.5. Deposit of Redemption Price 27
SECTION 3.6. Notes Redeemed in Part 27
ARTICLE IV
COVENANTS
SECTION 4.1. Payment of Notes 28
SECTION 4.2. SEC Reports 28
SECTION 4.3. Limitation on Indebtedness 28
SECTION 4.4. Limitation on Indebtedness and Preferred Stock of Restricted
Subsidiaries 30
SECTION 4.5. Limitation on Restricted Payments 32
SECTION 4.6. Limitation on Restrictions on Distributions from Restricted
Subsidiaries 34
SECTION 4.7. Limitation on Sale of Assets and Subsidiary Stock 35
SECTION 4.8. Limitation on Transactions with Affiliates 38
SECTION 4.9. Change of Control 39
SECTION 4.10. Limitation on Sale or Issuance of Capital Stock of Restricted
Subsidiaries 40
SECTION 4.11. Limitation on Liens 40
SECTION 4.12. Limitation on Sale/Leaseback Transactions 41
SECTION 4.13. Compliance with Laws 41
SECTION 4.14. Compliance Certificate 41
SECTION 4.15. Further Instruments and Acts 41
SECTION 4.16. Maintenance of Office or Agency 41
SECTION 4.17. Corporate Existence 42
SECTION 4.18. Payment of Taxes and Other Claims 42
SECTION 4.19. Maintenance of Properties and Insurance 42
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ii
ARTICLE V
SUCCESSOR ISSUER
SECTION 5.1. When the Issuer May Merge or Transfer Assets 43
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.1. Events of Default 44
SECTION 6.2. Acceleration 46
SECTION 6.3. Other Remedies 46
SECTION 6.4. Waiver of Past Defaults 46
SECTION 6.5. Control by Majority 47
SECTION 6.6. Limitation on Suits 47
SECTION 6.7. Rights of Holders to Receive Payment 47
SECTION 6.8. Collection Suit by Trustee 47
SECTION 6.9. Trustee May File Proofs of Claim 48
SECTION 6.10. Priorities 48
SECTION 6.11. Undertaking for Costs 48
SECTION 6.12. Waiver of Stay or Extension Laws 48
ARTICLE VII
TRUSTEE
SECTION 7.1. Duties of Trustee 49
SECTION 7.2. Rights of Trustee 50
SECTION 7.3. Individual Rights of Trustee 51
SECTION 7.4. Trustee's Disclaimer 51
SECTION 7.5. Notice of Defaults 51
SECTION 7.6. Reports by Trustee to Holders 51
SECTION 7.7. Compensation and Indemnity 51
SECTION 7.8. Replacement of Trustee 52
SECTION 7.9. Successor Trustee by Merger 53
SECTION 7.10. Eligibility; Disqualification 53
SECTION 7.11. Preferential Collection of Claims Against Issuer 54
ARTICLE VIII
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.1. Discharge of Liability on Notes; Defeasance 54
SECTION 8.2. Conditions to Defeasance 55
SECTION 8.3. Application of Trust Money 56
SECTION 8.4. Repayment to Issuer 56
SECTION 8.5. Indemnity for Government Obligations 56
SECTION 8.6. Reinstatement 56
ARTICLE IX
AMENDMENTS
SECTION 9.1. Without Consent of Holders 57
SECTION 9.2. With Consent of Holders 58
SECTION 9.3. Compliance with Trust Indenture Act 58
SECTION 9.4. Revocation and Effect of Consents and Waivers 58
SECTION 9.5. Notation on or Exchange of Notes 59
SECTION 9.6. Trustee to Sign Amendments 59
SECTION 9.7. Payment for Consent 59
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Trust Indenture Act Controls 59
SECTION 10.2. Notices 60
SECTION 10.3. Communication by Holders with Other Holders 60
SECTION 10.4. Certificate and Opinion as to Conditions Precedent 60
SECTION 10.5. Statements Required in Certificate or Opinion 61
SECTION 10.6. When Notes Disregarded 61
SECTION 10.7. Rules by Trustee, Paying Agent and Registrar 61
SECTION 10.8. Legal Holidays 61
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SECTION 10.9. Governing Law 62
SECTION 10.10. No Recourse Against Others 62
SECTION 10.11. Successors 62
SECTION 10.12. Multiple Originals 62
SECTION 10.13. Variable Provisions 62
SECTION 10.14. Qualification of Indenture 62
SECTION 10.15. Table of Contents; Headings 62
SECTION 10.16. Severability 62
Rule 144A/Regulation S Appendix
Exhibit 1 to Appendix - Form of Initial Note
Exhibit A - Form of Exchange Note and Private Exchange Note
- --------
<PAGE> 5
INDENTURE, dated as of March 15, 2000, between SPECTRASITE
HOLDINGS, INC., a Delaware corporation (as further defined below, the "Issuer"),
and UNITED STATES TRUST COMPANY OF NEW YORK, a bank and trust company organized
under New York banking law, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Issuer's
$200,000,000 aggregate principal amount of 10 3/4% Senior Notes due 2010 (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 10 3/4% Senior Notes due 2010 (the "Exchange
Notes") and, if and when issued pursuant to a private exchange for Initial
Notes, the Issuer's Series B 10 3/4% Senior Notes Due 2010 (the "Private
Exchange Notes," together with the Initial Notes and the Exchange Notes, the
"Notes"):
<PAGE> 6
2
ARTICLE IDEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions
"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 and 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 during the period beginning on the first day of such quarter
and ending on the 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 indirectly,
<PAGE> 7
3
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Asset Disposition" 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, (u) a disposition by a Restricted
Subsidiary to the Issuer or by the Issuer or a Restricted Subsidiary to another
Restricted Security, (v) a disposition that constitutes a Restricted Payment
permitted by Section 4.5, (w) a disposition of assets with a fair market value
of less than $5.0 million, (x) any transaction not prohibited by Section 4.5 or
that constitutes a Permitted Investment, (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 be the capitalized amount of such
obligation determined in accordance with GAAP.
"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
<PAGE> 8
4
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) 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 such term is used in Sections 13(d)-3
and 13(d)-5 of the Exchange Act, except that for purposes of this
clause (i) (a) 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", 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 (i), 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,
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", directly or indirectly, in the aggregate a lesser
percentage of the total voting power of the Voting Stock of such parent
entity 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 such parent entity; and (b) the
Permitted Holders shall be deemed to beneficially own any Voting Stock
of an entity held by any other parent entity, so long as the Permitted
Holders beneficially own, directly or indirectly, in the aggregate, a
majority of the voting power of the parent entity's Voting Stock);
(i) 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;
(i) 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
<PAGE> 9
5
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; and
(i) the sale of all or substantially all of the Issuer's assets to another
person, other than a Permitted Holder or a person that is controlled by
the Permitted Holders.
"Code" means the Internal Revenue Code of 1986, as amended.
"Completed Broadcast Tower" means a communications tower of at
least 500 feet, other than a Completed Tower, with, as of the date of
determination, (i) at least one broadcast tenant that has executed a definitive
lease or Site Management Contract with the Issuer or any of its Restricted
Subsidiaries and (ii) capacity for at least one other tenant.
"Completed Tower" means a communications transmission tower
with, as of any date of determination, (i) at least one anchor tenant that has
executed a definitive lease or Site Management Contract 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, and (iii) the aggregate
liquidation value of all Disqualified Stock of the Issuer and all preferred
stock of Restricted Subsidiaries of the Issuer not owned by the Issuer or a
Restricted Subsidiary, 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 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
<PAGE> 10
6
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, subject to the
exclusion contained in (iv) below, the Issuer's equity in the net
income of any such Person 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);
(i) 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;
(i) any net income of any Restricted Subsidiary if such Restricted
Subsidiary is subject to restrictions (other than any restrictions
permitted in Section 4.6), 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 clause (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;
(i) 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;
(i) any net income or loss of any Unrestricted Subsidiary, except
to the extent distributed to the Issuer or one of its Subsidiaries;
(i) any extraordinary gain or loss; and
(i) the cumulative effect of a change in accounting principles.
<PAGE> 11
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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.
"Credit Facility" means any debt or credit facility or
commercial paper facility providing for revolving credit loans, term loans,
accounts receivable financing (including through the sale of accounts receivable
to such lenders or to special purpose entities formed to borrow from such
lenders against such accounts receivable) or letters of credit, or other
non-convertible debt securities or other form of debt financing, in each case,
as amended, restated, supplemented, extended, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time, including any such
amendment, restatement, supplement, extension, modification, renewal, refunding,
replacement or refinancing that increases the amount borrowable thereunder or
alters the maturity thereof.
"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 at the option of
the holder thereof 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
materially more favorable taken as a whole to the holders of such Capital Stock
than the provisions described under Section 4.9 and Section 4.7.
<PAGE> 12
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"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 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 the
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 paid to the Issuer in the form of a
dividend 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 permitted in Section 4.6.
"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
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9
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 unless such Indebtedness
or Capital Stock is repaid or redeemed on the date such Person 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;
(i) all Capitalized Lease Obligations of such Person and all Attributable
Debt in respect of Sale/Leaseback Transactions entered into by such
Person;
(i) 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);
(i) 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);
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(i) 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);
(i) all obligations of the type referred to in clauses (i) through (v)
above, 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;
(i) all obligations of the type referred to in clauses (i) through (vi)
above, 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
(i) 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 a party or a
beneficiary.
"Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers, lessees or licensees 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"
<PAGE> 15
11
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 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.
<PAGE> 16
12
"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.
"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 Memorandum" means the Offering Memorandum dated
March 10, 2000 relating to the Initial Notes; provided that after the issuance
of Exchange Notes, all references herein to "Offering Memorandum" 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 that meets the
requirements of Section 10.5 hereof 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 Acquisition Indebtedness" means Indebtedness or
acquired debt in an aggregate principal amount not to exceed $50.0 million at
any one time outstanding, incurred or assumed in connection with the acquisition
of an entity that is engaged in a Permitted Business and that becomes a
Restricted Subsidiary or the acquisition of any assets constituting a business
or line of business as determined by the Board of Directors, that is a Permitted
Business or incurred by such entity or the owner of such assets and outstanding
on the date of such acquisition.
"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.
<PAGE> 17
13
"Permitted Holders" means any or all of Stephen H. Clark,
David P. Tomick, Joe L. Finley, Welsh, Carson, Anderson & Stowe, VIII, L.P.,
WCAS Information Partners, L.P., WCAS Capital Partners III, L.P., their
respective general partners, employees of Welsh, Carson, Anderson & Stowe, CIBC
WG Argosy Merchant Fund 2, L.L.C., Co-Investment Merchant Fund 3, LLC, Caravelle
Investment Fund, L.L.C., Tower Parent Corp., Whitney Equity Partners, L.P., J.H.
Whitney III, L.P., Whitney Strategic Partners III, L.P., J.H. Whitney Mezzanine
Fund, 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 Restricted Subsidiary or a Person
which will, upon the making of such Investment, become a Restricted Subsidiary;
(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, 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 or pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of a
debtor; (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 $2.0 million in 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 sum of (x) $10.0
million and 10% of the Issuer's Consolidated Tangible Assets; (xi) any Interest
Rate Agreement or Currency Agreement; (xii) any acquisition of assets to
the extent the consideration therefor consists 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; (xiv) deposits of proceeds or Qualified
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
<PAGE> 18
14
Section 4.7; (xv) Investments in an amount not to exceed the Net Cash
Proceeds or Qualified Proceeds of the issuance or sale, other than to a
Subsidiary of the Issuer, of Capital Stock of the Issuer, other than
Disqualified Stock, to the extent that such Net Cash Proceeds or Qualified
Proceeds have not been applied to make a Restricted Payment or to effect other
transactions pursuant to Section 4.5 or to the extent such Net Cash Proceeds or
Qualified Proceeds have not been used to Incur Indebtedness; and (xvi) other
Investments not to exceed, at any one time outstanding, $75.0 million.
"Permitted Liens" means, with respect to any person, (a)
pledges or deposits by such Person under worker'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 proceedings, 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) survey exceptions, 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 Liens securing the obligations
(other than Indebtedness) of the Issuer or any of the Restricted Subsidiaries
under any such leases and subleases of real property; (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 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 Indebtedness secured by such
Liens shall have otherwise been permitted to be issued under this Indenture and
(B) such Liens shall not encumber any other assets or property of the Issuer or
any of its Restricted Subsidiaries; (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
<PAGE> 19
15
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 a Credit Facility and any other Liens securing Indebtedness permitted
under this Indenture to be Incurred by a Restricted Subsidiary; (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 Restriction Subsidiary of the
Issuer with respect to obligations that do not exceed $25.0 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 Restricted 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; (p) Liens on the Capital Stock of Unrestricted
Subsidiaries; (q) the Liens granted pursuant to the terms of the Security and
Subordination Agreement, as amended, modified or supplemented from time to
time, entered into pursuant to the terms of the Agreement and Plan of Merger,
dated as of February 10, 1999, among the Issuer, SpectraSite
Communications, Inc., SHI Merger Sub, Inc., Nextel Communications, Inc. and
certain of its subsidiaries; (r) Liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a depository or
other financial institution; (s) Liens on property subject to Capitalized Lease
Obligations to the extent the related Capitalized Lease Obligation is permitted
to be incurred under Section 4.3 or Section 4.4 of this Indenture; (t) Liens on
property of the Issuer or a Restricted Subsidiary at the time the Issuer or
Restricted Subsidiary acquired the property, including any acquisition by means
of a merger or consolidation with or into the Issuer or any Restricted
Subsidiary; provided, however, that such Liens are not created, incurred or
assumed in connection with, or in contemplation of, such acquisition, provided
further, however, that such Liens may not extend to any other property owned by
the Issuer or any Restricted Subsidiary; and (u) Liens on government securities
that secure Indebtedness, to the extent that such government securities are
purchased with the proceeds of such Indebtedness.
"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
<PAGE> 20
16
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 earlier of the Stated
Maturity of the Notes and 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 lesser of the Average Life of the Indebtedness being Refinanced and the
Average Life of the Notes 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 in respect thereof (other than (a) dividends or
distributions payable solely in its Capital Stock (other than Disqualified
Stock), (b) dividends or distributions payable solely to the Issuer or a
Restricted Subsidiary, and (c) 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 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), other than the exercise by the Issuer of
any option to convert or exchange any Capital Stock into Indebtedness so long as
such Indebtedness is permitted to be Incurred as of the date of such
<PAGE> 21
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exercise pursuant to this Indenture, and 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.
"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 in respect thereof) which 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.
"Senior Discount Notes" means the Issuer's 12% Senior
Discount Notes due 2010.
<PAGE> 22
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"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.
"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 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 270 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
<PAGE> 23
19
& Poor's Ratings Group, and (v) investments in securities with maturities of
one year or less from the date of acquisition issued or fully guaranteed by any
state, commonwealth or territory of the United States 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. ss.ss.
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) 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 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.
"Trust Officer" means any trust officer, assistant vice
president, or vice president of the Trustee assigned by the Trustee to
administer this Indenture.
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means such successor.
"2008 Notes" means the Issuer's 12% Senior Discount Notes Due
2008.
"2009 Notes" means the Issuer's 11 1/4% Senior Discount Notes
Due 2009.
"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
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20
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
(a) immediately after giving effect to such designation no Default shall have
occurred and be continuing and (b) such designation shall be deemed to be an
Incurrence of Indebtedness by a Restricted Subsidiary of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if such Indebtedness is permitted under this Indenture. 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.
SECTION 1.2. Other Definitions .
Defined in
Term Section
"Affiliate Transaction"...................................................4.8
"Appendix"................................................................2.1
"Authenticating Agent"....................................................2.2
"Bankruptcy Law"..........................................................6.1
<PAGE> 25
21
"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
.........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;
(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;
<PAGE> 26
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(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 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.
<PAGE> 27
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.........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.
.........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
<PAGE> 28
24
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 Trustee 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.
.........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.
<PAGE> 29
25
.........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 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
<PAGE> 30
26
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 IIIREDEMPTION
.........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 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;
(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;
<PAGE> 31
27
(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.
.........If the Issuer complies with the preceding paragraph, then,
unless the Issuer defaults in the payment of such redemption price, 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
<PAGE> 32
28
Issuer's expense) a new Note equal in a principal amount 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 ss. 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 proceeds therefrom, the Indebtedness to Adjusted EBITDA Ratio of the
Issuer would be equal to or 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 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;
<PAGE> 33
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provided, however, that any 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 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 (together with the amount of any Indebtedness then
outstanding and Incurred pursuant to clause (b)(vi) of Section 4.4) at any one
time outstanding not to exceed the greater of (x) $25.0 million and (y) an
amount equal to 7.5% of the Issuer's Consolidated Tangible Assets; 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 by a
Restricted Subsidiary 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 either (x)
the Issuer would be permitted to incur at least $1.00 of additional
Indebtedness pursuant to paragraph (a) of this Section 4.3 or (y) the Issuer
would have an Indebtedness to Adjusted EBITDA Ratio immediately after giving
effect to such merger no greater than the Indebtedness to Adjusted EBITDA Ratio
immediately prior to such merger; (ix) 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), 2.0 times the sum of 100% of the aggregate Net Cash
Proceeds and 50% of the non-cash proceeds received by the Issuer from the issue
or sale of Capital Stock (other than Disqualified Stock) subsequent to July 1,
1999 (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
aggregate amount of such Net Cash Proceeds used to make Restricted Payments
pursuant to clause 3(B) of paragraph (a) of Section 4.5 or applied pursuant to
clause (i)(B) of paragraph (b) of Section 4.5; (x) other Indebtedness in an
aggregate principal amount outstanding at any time not to exceed $25.0 million
(together with the amount of any Indebtedness and Preferred Stock then
outstanding and Incurred pursuant to clause (b)(x) of Section 4.4); (xi)
Indebtedness
<PAGE> 34
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Incurred by the Issuer's Subsidiaries in compliance with Section 4.4; (xii)
Indebtedness incurred under Credit Facilities, in an aggregate principal
amount outstanding at any time, together with the amount of any
Indebtedness then outstanding and incurred under Section 4.4(b)(i) of this
Indenture, not to exceed the sum of (A) the product of $200,000 times the number
of Completed Towers on the date of incurrence and (B) the product of $1,000,000
times the number of Completed Broadcast Towers on the date of such incurrence;
provided that the amount of such Indebtedness incurred pursuant to this clause
(B) does not exceed 25% of the cost of acquiring or constructing such Completed
Broadcast Towers; (xiii) Indebtedness representing the deferred payment of the
purchase price for any entity that is engaged in a Permitted Business and that
becomes a Restricted Subsidiary or the acquisition of any assets constituting a
business or line of business, as determined in good faith by the Board of
Directors of the Issuer, that is a Permitted Business, not to exceed at any one
time outstanding, together with any Indebtedness then outstanding and incurred
pursuant to Section 4.4(b)(xi) of this Indenture, 50% of the purchase price for
the related entity or business so acquired; provided, however, that after giving
effect to such acquisition and all Indebtedness incurred in connection
therewith, either (A) the Issuer would have been able to incur at least $1.00 of
additional Indebtedness under this Section 4.3 or (B) the Issuer would have had
an Indebtedness to Adjusted EBITDA Ratio no greater than prior to such
transaction; and (xiv) Permitted Acquisition Indebtedness.
.........(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 earlier of 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 (and may from time to time reclassify) 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 equal to or 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.
<PAGE> 35
31
.........(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 Credit Facilities in an aggregate
principal amount outstanding at any time (together with the amount of any
Indebtedness then outstanding and incurred under clause (b)(xii) of Section 4.3)
not to exceed the sum of (x) the product of $200,000 times the number of
Completed Towers on the date of such Incurrence; and (y) the product of
$1,000,000 times the number of Completed Broadcast Towers on the date of such
Incurrence, provided that the amount of such Indebtedness incurred pursuant to
this clause (y) does not exceed 25% of the cost of acquiring or constructing
such Completed Broadcast Towers; (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 Issuer 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 prior to the date on
which such Restricted Subsidiary was acquired by the Issuer and Indebtedness or
Preferred Stock of an entity merged into a Restricted Subsidiary (other than, in
either case, 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 or such entity was merged into such Restricted Subsidiary); provided,
however, that on the date of such acquisition or merger and after giving effect
thereto, either (x) the Issuer would have been permitted to incur at least
$1.00 or additional Indebtedness pursuant to paragraph (a) of Section 4.3 or
(y) the Issuer would have had an Indebtedness to Adjusted EBITDA Ratio
immediately after giving effect to such merger or acquisition no greater
than the Indebtedness to Adjusted EBITDA Ratio immediately prior to such
transaction; (iv) Indebtedness or Preferred Stock outstanding on the Issue
Date; (v) Refinancing Indebtedness Incurred in respect of Indebtedness or
Preferred Stock referred to in paragraph (a) above or in clauses (iii) or (iv)
of this paragraph or this clause (v); provided, however, that Indebtedness
of the Issuer may not be refinanced pursuant to this clause (v); (vi)
Indebtedness (including Capitalized Lease Obligations) Incurred by a
Subsidiary to finance the acquisition, construction or improvement of fixed or
capital assets in an aggregate principal amount at any one time outstanding
(together with the amount then outstanding and Incurred pursuant to clause
(b)(iv) of Section 4.3) not to exceed the greater of (x)$25.0 million and
(y) an amount equal to 7.5% of the Issuer's Consolidated Tangible Assets;
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
<PAGE> 36
32
Indebtedness permitted to be Incurred pursuant to this Indenture;
(viii) Indebtedness represented by Guarantees, by a Subsidiary, of
Indebtedness otherwise permitted to be Incurred by the Issuer or a
Subsidiary pursuant to this Indenture; provided that any Subsidiary which
guarantees the 2008 Notes or the 2009 Notes will guarantee the Notes; any
Subsidiary that guarantees the Notes will guarantee the Senior Discount
Notes; any Subsidiary that guarantees the Senior Discount Notes will guarantee
the Notes; in each case on substantially similar terms; (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)(ix) of Section 4.3), 2.0 times (A) the sum of 100% of the
aggregate Net Cash Proceeds and 50% of the non-cash proceeds received by
the Issuer from the issue or sale of Capital Stock (other than Disqualified
Stock) subsequent to July 1, 1999, other than an issuance or sale to a
Subsidiary or to an employee stock ownership plan or to a trust established
by the Issuer or any Restricted Subsidiary, less (B) the amount of such Net Cash
Proceeds used to make Restricted Payments pursuant to clause 3(B) of paragraph
(a) of Section 4.5 or applied pursuant to clause (i)(B) of paragraph (b) of
Section 4.5; (x) other Indebtedness and Preferred Stock in an aggregate
principal and/or liquidation amount outstanding at any time not to exceed $25.0
million (less the amount of any Indebtedness then outstanding and Incurred
pursuant to clause (b)(x) of Section 4.3); (xi) Indebtedness representing the
deferred payment of the purchase price for any entity that is engaged in a
Permitted Business and that becomes a Restricted Subsidiary or the acquisition
of any assets constituting a business or line of business, as determined in good
faith by the Board of Directors of the Issuer, that is a Permitted Business, not
to exceed at any one time outstanding, together with any Indebtedness then
outstanding and incurred pursuant to Section 4.3(b)(xiii) of this Indenture, 50%
of the purchase price for the related entity or business so acquired; provided,
however, that after giving effect to such acquisition and all Indebtedness
incurred in connection therewith, either (A) the Issuer would have been able
to incur at least $1.00 of additional Indebtedness under Section 4.3 or (B)
the Issuer would have had an Indebtedness to Adjusted EBITDA Ratio no greater
than prior to such transaction; and (xii) Permitted Acquisition Indebtedness.
.........(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 (and may from time to time reclassify) 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 4.4 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
.........This 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)
except with respect to making an Investment, the Issuer could not incur at least
$1.00 of
<PAGE> 37
33
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
July 1, 1999 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)(ix) 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 July 1, 1999 (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 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)(ix) of
<PAGE> 38
34
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, (D) such new Indebtedness has an Average
Life equal to or greater than the lesser of the Average Life of the Indebtedness
being so redeemed, repurchased, acquired, or retired, and the Average Life of
the Notes, and (E) any purchase, redemption, defeasance or other acquisition
made pursuant to this clause (b)(ii) 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 former employees in an amount not to exceed $5.0 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.
.........The amount of any Investment shall be measured on the date
made and shall not give effect to subsequent changes in value.
.........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 a 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 or Capital
Stock Incurred or issued 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 or Capital Stock Incurred or issued as
consideration for, or to provide 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
<PAGE> 39
35
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 or such
lease, license or other such 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; (7) customary provisions with respect to
the disposition or distribution of assets or property in joint venture and other
similar agreements; and (8) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the ordinary course of
business; provided that the Board of Directors of the Issuer in good faith
determines that such restrictions will not have a material adverse impact on the
Issuer's ability to make payments on the Notes.
.........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 Restricted Subsidiary
(provided, that the applicable Restricted 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) make an offer with respect to the 2008 Notes or the 2009 Notes to
the extent required in the indentures governing the 2008 Notes and 2009 Notes;
(C) acquire all or substantially all of the assets of an entity engaged in a
Permitted Business; (D) 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 Voting Stock and (y) such acquisition is otherwise made in
accordance with this Indenture, including, without limitation, Section 4.5; or
(E) 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
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36
Cash after application in accordance with clauses (A), (B), (C), (D)
or (E), 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 $10.0 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 principal amount 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 $10.0 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).
<PAGE> 41
37
.........(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 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 or an
integral multiple thereof) which was delivered for purchase by the Holder, the
aggregate principal amount 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 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, or
integral multiples thereof, shall be purchased). Holders whose Notes are
purchased only in part will be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered.
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38
.........(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 $5.0 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 $10.0
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 of the Issuer, or any arrangements relating thereto, (iii) the grant
of stock options or similar rights to employees and directors of the Issuer
pursuant to plans approved by the Board of Directors of the Issuer, (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, (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 sale of any Capital Stock (other than
Disqualified Stock) of the Issuer, (viii) any transaction consummated pursuant
to the terms of any agreement described in the Form 10-K for the year ended
December
<PAGE> 43
39
31, 1999, including the exhibits and documents included by reference therein,
giving effect to any subsequent supplements, amendments, modifications or
alterations thereof that are approved by the disinterested members of the
Issuer's Board of Directors, (ix) any transaction in the ordinary course of
business between the Issuer or any Restricted Subsidiary and any Affiliate of
the Issuer relating to the acquisition, management, construction, leasing or
licensing of Tower Assets, provided, however, that such transaction is on terms
that are no less favorable, taken as a whole, to the Issuer or the relevant
Restricted Subsidiary than those that could have been obtained in a comparable
transaction by the Issuer or such Restricted Subsidiary with an unrelated Person
or is otherwise on terms that, taken as a whole, the Issuer has determined to be
fair to the Issuer or the relevant Restricted Subsidiary) and (x) any
transaction between the Issuer or any of its Restricted Subsidiaries and any of
its Affiliates involving ordinary course investment banking, commercial banking
or related activities.
.........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 principal amount thereof as of the date of repurchase, plus
accrued and unpaid interest, if any, to the date of repurchase, in accordance
with the terms contemplated in Section 4.9(b).
.........(b) 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 or any integral multiple thereof at a purchase price in
cash equal to 101% of the principal amount thereof as of the
date of repurchase, plus accrued and unpaid interest, if any,
to the date of repurchase;
(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
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40
letter setting forth the name of the Holder, the principal amount 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.
.........(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 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), 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 Subsidiary unless in either case (a) the Issuer's and Restricted
Subsidiary's minority equity interest in such Person after giving effect to any
such disposition, would be permitted under Section 4.5; and (b) the net cash
proceeds from such transfer, conveyance, sale, lease or other disposition are
applied in accordance with Section 4.7.
.........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
<PAGE> 45
41
basis to, in the case of Subordinated Obligations) such obligation for
so long as such obligation is so secured.
.........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 ss. 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
<PAGE> 46
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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.
.........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 Issue 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
<PAGE> 47
43
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.
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 ind 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 (A) in the case of a merger of the Issuer into a
Wholly Owned Subsidiary, (B) a merger entered into solely for the
purpose of reincorporating the Issuer in another jurisdiction or (C) a
merger the Issuer enters into solely for the purpose of forming a
holding company to hold all of the outstanding capital stock of the
Issuer, 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, either (x) would have been permitted to incur at least
$1.00 of additional Indebtedness under Section 4.3(a) or (y) would have
had an Indebtedness to Adjusted EBITDA Ratio immediately after giving
effect to such consolidation, merger, conveyance, transfer, lease or
other disposition no greater than the Indebtedness to Adjusted EBITDA
Ratio immediately prior to such transaction; 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.
<PAGE> 48
44
........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
.........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 or mandatory 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
$10.0 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
<PAGE> 49
45
(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;
(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; or
(9) any final judgment or decree for the payment of money in
excess of $10.0 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 $10.0 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.
.........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
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46
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
it obtains knowledge of the occurrence thereof, written notice in the form of an
Officer's Certificate of any Event of Default under clause (6) 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.
.........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 of the outstanding Notes
by notice to the Issuer, may declare the principal amount of, and accrued but
unpaid interest on all the Notes to be due and payable. Upon such a declaration,
such principal amount 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 principal amount 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 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 principal amount 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 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.
<PAGE> 51
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.........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 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
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 principal amount 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.
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.........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 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 principal anmount and interest, ratably, without preference
or priority of any kind, according to the amounts due and payable on
the Notes for principal amount 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
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49
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.
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.
<PAGE> 54
50
.........(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 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.
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.........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. 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 ss. 313(a). The Trustee also shall comply with TIA ss.
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
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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 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
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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 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 ss. 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 ss. 310(a). The Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition. The Trustee shall comply with
TIA ss. 310(b); provided, however, that there shall be excluded from the
operation of TIA ss. 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 ss. 310(b)(1) are met.
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SECTION 7.11. Preferential Collection of Claims Against Issuer
. The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss.311(b). A Trustee who has resigned or been removed
shall be subject to TIA ss. 311(a) to the extent indicated.
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.
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(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.
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;
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(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
(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
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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.
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, in the good faith
opinion of the Board of Directors of the Issuer, 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.
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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 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;
(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
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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 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.
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; 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.
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.
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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:
if to the Issuer:
SpectraSite Holdings, Inc.
100 Regency Forest Drive, Suite 400
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. Except for a notice to the Trustee, which is deemed given only when
received, and except as otherwise provided in this Indenture, 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 ss. 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 ss.
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,
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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.
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
date is a Legal Holiday, the record date shall not be affected.
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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.
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 provision 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> 67
63
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/ Margaret M. Ciesmelewski
---------------------------------
Name: Margaret M. Ciesmelewski
Title: Assistant Vice President
<PAGE> 68
64
RULE 144A/REGULATION S APPENDIX
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 10 3/4% Senior Notes due 2010 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 10 3/4% Senior Notes due 2010,
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 of Private Exchange Notes.
"Private Exchange Notes" means the 10 3/4% Senior Notes due
2010, if any, to be issued pursuant to this Indenture to the Initial Purchasers
in a Private Exchange.
"Purchase Agreement" means the Purchase Agreement dated March
10, 2000, among the Issuer and the Initial Purchasers.
<PAGE> 69
65
"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 March 15, 2000 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
Defined
Term in Section
------- --------------
"Agent Members" 2.1(b)
"Global Note" 2.1(a)
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 I 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
<PAGE> 70
66
for the Depositary (or with such other custodian as the Depositary may 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 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 of U.S. $200,000,000 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 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 of
Notes outstanding at any time may not exceed U.S. $200,000,000 except as
provided in Section 2.7 of this Indenture.
<PAGE> 71
67
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 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 HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT
OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), OR (B)
IT IS AN "INSTITUTIONAL ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2),
(3) OR (7) OR REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL
ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE
<PAGE> 72
68
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITHREGULATION S UNDER THE SECURITIES
ACT, (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT
(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL
BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE
UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH
TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES AT THE TIME OF
TRANSFER OF LESS THAN $100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY
THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE, THE
HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING
TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF
THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE 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. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN
VIOLATION OF THE FOREGOING RESTRICTIONS."
(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).
<PAGE> 73
69
(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 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.
<PAGE> 74
70
(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 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 on 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
<PAGE> 75
71
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 equal to the principal
amount 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 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 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 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> 76
1
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 HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), OR (B) IT IS AN
"INSTITUTIONAL ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR
(7) OR REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED
INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT,
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE
<PAGE> 77
2
TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND,
IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES
AT THE TIME OF TRANSFER OF LESS THAN $100,000, AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT OR (E)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED
A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS NOTE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON
THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS
CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL
ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE 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. AS USED HEREIN,
THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE
CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
<PAGE> 78
3
SPECTRASITE HOLDINGS, INC.
No. __ Principal Amount $__________
CUSIP NO. ______
10 3/4% Senior Note due 2010
SpectraSite Holdings, Inc., a Delaware corporation, promises
to pay to __________, or registered assigns, the principal sum of
__________________________ Dollars on March 15, 2010.
Interest Payment Dates: March 15 and September 15.
Record Dates: March 1 and September 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> 79
4
[FORM OF REVERSE SIDE OF INITIAL NOTE]
(Reverse of Note)
10 3/4% Senior Note due 2010
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 principal amount 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.
The Notes will accrete interest at a rate of 10 3/4% per annum
from the Issue Date, payable semi-annually commencing September 15, 2000, to
Holders of record at the close of business on the March 1 or September 1
immediately preceding the interest payment date of March 15 and September 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 March 1 or September 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> 80
5
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
March 15, 2000 (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. ss.ss. 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 $200,000,000 aggregate principal amount (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.
<PAGE> 81
6
5. Redemption
Except as set forth in the following paragraph, the Notes will
not be redeemable at the option of the Issuer prior to March 15, 2005.
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
principal amount), plus accrued and unpaid interest, if any, on such principal
amount 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 March 15 of the
years set forth below:
Period Redemption Price
---------- -----------------
2005 105.375%
2006 103.583%
2007 101.792%
2008 and thereafter 100.000%
In addition, at any time and from time to time prior to March
15, 2003, the Issuer may redeem in the aggregate up to 35% of the aggregate
principal amount of the Notes with the proceeds of one or more Equity Offerings,
at a redemption price (expressed as a percentage of the principal amount
thereof) of 110.750% 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 65% of the aggregate principal amount 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 90 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> 82
7
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 principal amount 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 March15, 2000, among the Issuer, and Morgan Stanley & Co. Incorporated,
CIBC World Markets Corp., Credit Suisse First Boston Corporation, Deutsche Bank
Securities Inc., Lehman Brothers Inc., BMO Nesbitt Burns Corp. and Scotia
Capital (USA) Inc. 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> 83
8
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 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 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.
<PAGE> 84
9
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 or mandatory 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 $10.0 million or its foreign
currency equivalent, (vii) certain events of bankruptcy, insolvency or
reorganization of the Issuer or any Significant Subsidiary of the Issuer or
(viii) any final judgment or decree for the payment of money in excess of $10.0
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 $10.0 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. 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.
<PAGE> 85
10
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
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.
<PAGE> 86
11
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., 100 Regency Forest Drive, Suite 400, Cary, North Carolina 27511,
Attention: Chief Financial Officer.
<PAGE> 87
12
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
<PAGE> 88
13
[ ] (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
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> 89
14
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.
Date:
--------------------
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> 90
15
NYDOCS01/682724 4
[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 Exchange Amount of decrease in Amount of increase in Principal Amount Signature of
----------------------- ---------------------- ----------------------- authorized
Principal Amount of Principal Amount of of this Global Note ----------------------
this Global Note this Global Note following such officer of Trustee or
decrease or increase Notes Custodian
</TABLE>
<PAGE> 91
1
EXHIBIT A
[FORM OF FACE OF EXCHANGE NOTE
[OR PRIVATE EXCHANGE NOTE]]
1
2
SPECTRASITE HOLDINGS, INC.
No.__ Principal Amount $________________
CUSIP NO.__________
10 3/4% Senior Note Due 2010
SpectraSite Holdings, Inc., a Delaware corporation, promises
to pay to _____________, or registered assigns, the principal sum of
__________________ Dollars on [___], 2010.
<PAGE> 92
2
Interest Payment Dates: March 15 and September 15.
Record Dates: March 1 and September 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> 93
3
[FORM OF REVERSE SIDE OF EXCHANGE NOTE
[OR PRIVATE EXCHANGE NOTE]]
10 3/4% Senior Note due 2010
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 principal amount 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].
The Notes will accrue interest at a rate of 10 3/4% from the
Issue Date, payable semi-annually commencing September 15, 2000, to Holders of
record at the close of business on the March 1 or September 1 immediately
preceding the interest payment date of March 15 and September 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 March 1 or September 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 an interest check to a Holder's registered address.
<PAGE> 94
4
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
March 15, 2000 (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 (I5 U.S.C. ss.ss. 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 $200,000,000 aggregate principal amount (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 the Issuer and its Restricted Subsidiaries to restrict distributions and
dividends from Restricted Subsidiaries.
<PAGE> 95
5
5. Redemption
Except as set forth in the following paragraph, the Notes will
not be redeemable at the option of the Issuer prior to March 15, 2005.
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
principal amount), plus accrued and unpaid interest, if any, on such principal
amount 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 March 15 of the
years set forth below:
Period Redemption Price
--------- -----------------
2005 105.375%
2006 103.583%
2007 101.792%
2008 and thereafter 100.000%
In addition, at any time and from time to time prior to March
15, 2003, the Issuer may redeem in the aggregate up to 35% of the aggregate
principal amount of the Notes with the proceeds of one or more Equity Offerings,
at a redemption price (expressed as a percentage of the principal amount
thereof) of 110.750% 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 65% of the aggregate principal amount 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 90 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> 96
6
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 principal amount 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.
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.
<PAGE> 97
7
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 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 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 or mandatory 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 $10.0 million or its foreign
currency equivalent, (vii) certain events of bankruptcy, insolvency or
reorganization of the Issuer or any Significant Subsidiary of the Issuer or
(viii) any final judgment or decree for the payment of money in excess of $10.0
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 $10.0 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. 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.
<PAGE> 98
8
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
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
<PAGE> 99
9
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., 100 Regency Forest Drive, Suite 400, Cary, North Carolina 27511,
Attention: Chief Financial Officer.
<PAGE> 100
10
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 4.5
SPECTRASITE HOLDINGS, INC.
as Issuer
and
UNITED STATES TRUST COMPANY OF NEW YORK
as Trustee
INDENTURE
Dated as of March 15, 2000
12 7/8% Senior Discount Notes due 2010
<PAGE> 2
i
TABLE OF CONTENTS
Page
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 21
SECTION 1.5. One Class of Notes 21
ARTICLE II
THE NOTES
SECTION 2.1. Form and Dating 22
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 24
SECTION 2.9. Temporary Notes 24
SECTION 2.10. Cancellation 24
SECTION 2.11. Defaulted Interest 25
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 26
SECTION 3.4. Effect of Notice of Redemption 26
SECTION 3.5. Deposit of Redemption Price 27
SECTION 3.6. Notes Redeemed in Part 27
ARTICLE IV
COVENANTS
SECTION 4.1. Payment of Notes 27
SECTION 4.2. SEC Reports 28
SECTION 4.3. Limitation on Indebtedness 28
SECTION 4.4. Limitation on Indebtedness and Preferred Stock of Restricted
Subsidiaries 30
SECTION 4.5. Limitation on Restricted Payments 32
SECTION 4.6. Limitation on Restrictions on Distributions from Restricted
Subsidiaries 34
SECTION 4.7. Limitation on Sale of Assets and Subsidiary Stock 35
SECTION 4.8. Limitation on Transactions with Affiliates 37
SECTION 4.9. Change of Control 38
SECTION 4.10. Limitation on Sale or Issuance of Capital Stock of Restricted
Subsidiaries 40
SECTION 4.11. Limitation on Liens 40
SECTION 4.12. Limitation on Sale/Leaseback Transactions 40
SECTION 4.13. Compliance with Laws 40
SECTION 4.14. Compliance Certificate 41
SECTION 4.15. Further Instruments and Acts 41
SECTION 4.16. Maintenance of Office or Agency 41
SECTION 4.17. Corporate Existence 41
SECTION 4.18. Payment of Taxes and Other Claims 41
SECTION 4.19. Maintenance of Properties and Insurance 42
<PAGE> 3
ii
ARTICLE V
SUCCESSOR ISSUER
SECTION 5.1. When the Issuer May Merge or Transfer Assets 42
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.1. Events of Default 43
SECTION 6.2. Acceleration 43
SECTION 6.3. Other Remedies 45
SECTION 6.4. Waiver of Past Defaults 46
SECTION 6.5. Control by Majority 46
SECTION 6.6. Limitation on Suits 46
SECTION 6.7. Rights of Holders to Receive Payment 46
SECTION 6.8. Collection Suit by Trustee 47
SECTION 6.9. Trustee May File Proofs of Claim 47
SECTION 6.10. Priorities 47
SECTION 6.11. Undertaking for Costs 47
SECTION 6.12. Waiver of Stay or Extension Laws 48
ARTICLE VII
TRUSTEE
SECTION 7.1. Duties of Trustee 48
SECTION 7.2. Rights of Trustee 48
SECTION 7.3. Individual Rights of Trustee 49
SECTION 7.4. Trustee's Disclaimer 50
SECTION 7.5. Notice of Defaults 50
SECTION 7.6. Reports by Trustee to Holders 50
SECTION 7.7. Compensation and Indemnity 51
SECTION 7.8. Replacement of Trustee 51
SECTION 7.9. Successor Trustee by Merger 52
SECTION 7.10. Eligibility; Disqualification 53
SECTION 7.11. Preferential Collection of Claims Against Issuer 53
ARTICLE VIII
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.1. Discharge of Liability on Notes; Defeasance 54
SECTION 8.2. Conditions to Defeasance 55
SECTION 8.3. Application of Trust Money 56
SECTION 8.4. Repayment to Issuer 56
SECTION 8.5. Indemnity for Government Obligations 56
SECTION 8.6. Reinstatement 56
ARTICLE IX
AMENDMENTS
SECTION 9.1. Without Consent of Holders 57
SECTION 9.2. With Consent of Holders 57
SECTION 9.3. Compliance with Trust Indenture Act 58
SECTION 9.4. Revocation and Effect of Consents and Waivers 58
SECTION 9.5. Notation on or Exchange of Notes 59
SECTION 9.6. Trustee to Sign Amendments 59
SECTION 9.7. Payment for Consent 59
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Trust Indenture Act Controls 59
SECTION 10.2. Notices 59
SECTION 10.3. Communication by Holders with Other Holders 60
SECTION 10.4. Certificate and Opinion as to Conditions Precedent 60
SECTION 10.5. Statements Required in Certificate or Opinion 61
SECTION 10.6. When Notes Disregarded 61
SECTION 10.7. Rules by Trustee, Paying Agent and Registrar 61
SECTION 10.8. Legal Holidays 61
<PAGE> 4
iii
SECTION 10.9. Governing Law 61
SECTION 10.10. No Recourse Against Others 62
SECTION 10.11. Successors 62
SECTION 10.12. Multiple Originals 62
SECTION 10.13. Variable Provisions 62
SECTION 10.14. Qualification of Indenture 62
SECTION 10.15. Table of Contents; Headings 62
SECTION 10.16. Severability 62
Rule 144A/Regulation S Appendix
Exhibit 1 to Appendix - Form of Initial Note
Exhibit A - Form of Exchange Note and Private Exchange Note
- --------
<PAGE> 5
INDENTURE, dated as of March 15, 2000, between SPECTRASITE
HOLDINGS, INC., a Delaware corporation (as further defined below, the "Issuer"),
and UNITED STATES TRUST COMPANY OF NEW YORK, a bank and trust company organized
under New York banking law, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Issuer's
$559,800,000 aggregate principal amount at maturity 12 7/8% Senior Discount
Notes due 2010 (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 7/8% Senior Discount Notes
due 2010 (the "Exchange Notes") and, if and when issued pursuant to a
private exchange for Initial Notes, the Issuer's Series B 12 7/8% Senior
Discount Notes Due 2010 (the "Private Exchange Notes," together with the
Initial Notes and the Exchange Notes, the "Notes"):
ARTICLE IDEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions
"Accreted Value" means an amount per $1,000 principal amount
at maturity of the Notes that is equal to (a) as of any date prior to March 15,
2005, the sum of (x) the initial offering price of each Note and (y) the portion
of the excess of the principal amount at maturity of each Note over such initial
offering price which shall have been amortized through such date, such amount to
be so amortized on a daily basis and compounded semi-annually on each March 15
and September 15 at the rate of 12[]% per annum from the Issue Date through the
date of determination computed on the basis of a 360-day year of twelve 30-day
months, and (b) as of any date after March 15, 2005, $1,000.
"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 and 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
<PAGE> 6
2
Management Contract of the Issuer or a Restricted Subsidiary with respect to
any Tower Assets that was in effect on the first day of such quarter as if
such lease or Site Management Contract had not been in effect during such
quarter and no rent under such lease had been received during such quarter and
D) any rent increases received by the Issuer or any Restricted Subsidiary
during the period beginning on the first day of such quarter and ending on
the 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 indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Asset Disposition" 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, (u) a disposition by a Restricted
Subsidiary to the Issuer or by the Issuer or a Restricted Subsidiary to another
Restricted Security, (v) a disposition that constitutes a Restricted Payment
permitted by Section 4.5, (w) a disposition of assets with a fair market value
of less than $5.0 million, (x) any transaction not prohibited by Section 4.5 or
that constitutes a Permitted Investment, (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
<PAGE> 7
3
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 be the capitalized amount of such
obligation determined in accordance with GAAP.
"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) 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 such term is used in Sections 13(d)-3
and 13(d)-5 of the Exchange Act, except that for purposes of this
clause (i) 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", 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 (i), (a) 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, 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", directly or indirectly, in the aggregate a lesser percentage of
the total voting power of the Voting Stock of such parent entity than
such other Person, and do not have the right or ability by
<PAGE> 8
4
voting power, contract or otherwise to elect or designate for election
a majority of the board of directors of such parent entity, and (b)
the Permitted Holders shall be deemed to beneficially own any Voting
Stock of an entity held by any other parent entity, so long as the
Permitted Holders beneficially own, directly or indirectly, in the
aggregate, a majority of the voting power of the parent entity's Voting
Stock);
(i) 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;
(i) 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; and
(i) the sale of all or substantially all of the Issuer's assets to another
person, other than a Permitted Holder or a person that is controlled by
the Permitted Holders.
"Code" means the Internal Revenue Code of 1986, as amended.
"Completed Broadcast Tower" means a communications tower of at
least 500 feet, other than a Completed Tower, with, as of the date of
determination, (i) at least one broadcast tenant that has executed a definitive
lease or Site Management Contract with the Issuer or any of its Restricted
Subsidiaries and (ii) capacity for at least one other tenant.
"Completed Tower" means a communications transmission tower
with, as of any date of determination, (i) at least one anchor tenant that has
executed a definitive lease or Site Management Contract with the Issuer or any
of its Restricted Subsidiaries and (ii) capacity for at least three tenants.
<PAGE> 9
5
"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, and (iii) the aggregate
liquidation value of all Disqualified Stock of the Issuer and all preferred
stock of Restricted Subsidiaries of the Issuer not owned by the Issuer or a
Restricted Subsidiary, 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 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, subject to the
exclusion contained in (iv) below, the Issuer's equity in the net
income of any such Person 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);
(i) 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;
(i) any net income of any Restricted Subsidiary if such Restricted
Subsidiary is subject to restrictions (other than any restrictions
permitted in Section 4.6), 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
<PAGE> 10
6
contained in clause (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;
(i) 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;
(i) any net income or loss of any Unrestricted Subsidiary, except
to the extent distributed to the Issuer or one of its Subsidiaries;
(i) any extraordinary gain or loss; and
(i) 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.
"Credit Facility" means any debt or credit facility or
commercial paper facility providing for revolving credit loans, term loans,
accounts receivable financing (including through the sale of accounts receivable
to such lenders or to special purpose entities formed to borrow from such
lenders against such accounts receivable) or letters of credit, or other
non-convertible debt securities or other form of debt financing, in each case,
as amended, restated, supplemented, extended, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time, including any such
amendment, restatement, supplement, extension, modification, renewal, refunding,
replacement or refinancing that increases the amount borrowable thereunder or
alters the maturity thereof.
<PAGE> 11
7
"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 at the option of
the holder thereof 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
materially more favorable taken as a whole 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 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 the
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 paid to the Issuer in the form of a
dividend 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 permitted in Section 4.6.
<PAGE> 12
8
"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.
"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 unless such Indebtedness
or Capital Stock is repaid or redeemed on the date such Person 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):
<PAGE> 13
9
(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;
(i) all Capitalized Lease Obligations of such Person and all Attributable
Debt in respect of Sale/Leaseback Transactions entered into by such
Person;
(i) 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);
(i) 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);
(i) 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);
(i) all obligations of the type referred to in clauses (i) through (v)
above, 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;
(i) all obligations of the type referred to in clauses (i) through (vi)
above, 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
(i) to the extent not otherwise included in this definition,
Hedging Obligations of such Person.
<PAGE> 14
10
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 a party or a
beneficiary.
"Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers, lessees or licensees 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
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).
<PAGE> 15
11
"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.
"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.
<PAGE> 16
12
"Offering Memorandum" means the Offering Memorandum dated
March 10, 2000 relating to the Initial Notes; provided that after the issuance
of Exchange Notes, all references herein to "Offering Memorandum" 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 that meets the
requirements of Section 10.5 hereof 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 Acquisition Indebtedness" means Indebtedness or
acquired debt in an aggregate principal amount not to exceed $50.0 million at
any one time outstanding, incurred or assumed in connection with the acquisition
of an entity that is engaged in a Permitted Business and that becomes a
Restricted Subsidiary or the acquisition of any assets constituting a business
or line of business, as determined by the Board of Directors, that is a
Permitted Business or incurred by such entity or the owner of such assets and
outstanding on the date of such acquisition.
"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,
David P. Tomick, Joe L. Finley, Welsh, Carson, Anderson & Stowe, VIII, L.P.,
WCAS Information Partners, L.P., WCAS Capital Partners III, L.P., their
respective general partners, employees of Welsh, Carson, Anderson & Stowe, CIBC
WG Argosy Merchant Fund 2, L.L.C., Co-Investment Merchant Fund 3, LLC, Caravelle
Investment Fund, L.L.C., Tower Parent Corp., Whitney Equity Partners, L.P., J.H.
Whitney III, L.P., Whitney Strategic Partners III, L.P., J.H. Whitney Mezzanine
Fund, 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 Restricted Subsidiary or a Person
which will, upon the making of such Investment, become a Restricted Subsidiary;
(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, 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
<PAGE> 17
13
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 or pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of a
debtor; (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
$2.0 million in 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 sum of (x) $10.0 million and 10% of the
Issuer's Consolidated Tangible Assets; (xi) any Interest Rate Agreement or
Currency Agreement; (xii) any acquisition of assets to the extent the
consideration therefor consists 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; (xiv) deposits of proceeds or Qualified 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; (xv) Investments in an
amount not to exceed the Net Cash Proceeds or Qualified Proceeds of the issuance
or sale, other than to a Subsidiary of the Issuer, of Capital Stock of the
Issuer, other than Disqualified Stock, to the extent that such Net Cash Proceeds
or Qualified Proceeds have not been applied to make a Restricted Payment or to
effect other transactions pursuant to Section 4.5 or to the extent such Net Cash
Proceeds or Qualified Proceeds have not been used to Incur Indebtedness; and
(xvi) other Investments not to exceed, at any one time outstanding, $75.0
million.
"Permitted Liens" means, with respect to any person, (a)
pledges or deposits by such Person under worker'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 proceedings, 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
<PAGE> 18
14
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) survey exceptions, 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 Liens securing the obligations
(other than Indebtedness) of the Issuer or any of the Restricted Subsidiaries
under any such leases and subleases of real property; (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 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 Indebtedness secured by such
Liens shall have otherwise been permitted to be issued under this Indenture and
(B) such Liens shall not encumber any other assets or property of the Issuer or
any of its Restricted Subsidiaries; (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 a Credit Facility and any other Liens securing Indebtedness permitted
under this Indenture to be Incurred by a Restricted Subsidiary; (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 Restriction Subsidiary of the
Issuer with respect to obligations that do not exceed $25.0 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 Restricted 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; (p) Liens on the Capital Stock of Unrestricted
Subsidiaries; (q) the Liens granted pursuant to the terms of
<PAGE> 19
15
the Security and Subordination Agreement, as amended, modified or supplemented
from time to time, entered into pursuant to the terms of the Agreement and Plan
of Merger, dated as of February 10, 1999, among the Issuer, SpectraSite
Communications, Inc., SHI Merger Sub, Inc., Nextel Communications, Inc. and
certain of its subsidiaries; (r) Liens, rights of set-off or similar rights
and remedies as to deposit accounts or other funds maintained with a
depository or other financial institution; (s) Liens on property subject to
Capitalized Lease Obligations to the extent the related Capitalized Lease
Obligation is permitted to be incurred under Section 4.3 or Section 4.4 of this
Indenture; (t) Liens on property of the Issuer or a Restricted Subsidiary at
the time the Issuer or Restricted Subsidiary acquired the property,
including any acquisition by means of a merger or consolidation with or into the
Issuer or any Restricted Subsidiary; provided, however, that such Liens are not
created, incurred or assumed in connection with, or in contemplation of, such
acquisition, provided further, however, that such Liens may not extend to
any other property owned by the Issuer or any Restricted Subsidiary; and
(u) Liens on government securities that secure Indebtedness, to the extent
that such government securities are purchased with the proceeds of such
Indebtedness.
"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 earlier of the Stated
Maturity of the Notes and the Stated
<PAGE> 20
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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 lesser of the Average Life of the
Indebtedness being Refinanced and the Average Life of the Notes 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 in respect thereof (other than (a) dividends or
distributions payable solely in its Capital Stock (other than Disqualified
Stock), (b) dividends or distributions payable solely to the Issuer or a
Restricted Subsidiary, and (c) 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 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), other than the exercise by the Issuer of
any option to convert or exchange any Capital Stock into Indebtedness so long as
such Indebtedness is permitted to be Incurred as of the date of such exercise
pursuant to this Indenture, and 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.
<PAGE> 21
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"Securities Act" means the Securities Act of 1933, as amended.
"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 in respect thereof) which 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.
"Senior Notes" means the Issuer's 10 3/4% Senior Notes due
2010.
"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.
"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
<PAGE> 22
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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 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 270 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 one year 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. ss.ss.
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) 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 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
<PAGE> 23
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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.
"Trust Officer" means any trust officer, assistant vice
president, or vice president of the Trustee assigned by the Trustee to
administer this Indenture.
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means such successor.
"2008 Notes" means the Issuer's 12% Senior Discount Notes Due
2008.
"2009 Notes" means the Issuer's 11 1/4% Senior Discount Notes
Due 2009.
"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
(a) immediately after giving effect to such designation no Default shall have
occurred and be continuing and (b) such designation shall be deemed to be an
Incurrence of Indebtedness by a Restricted Subsidiary of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if such Indebtedness is permitted under this Indenture. 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.
<PAGE> 24
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"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.
SECTION 1.2. Other Definitions .
Defined in
Term Section
"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
.........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.
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"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;
(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.
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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 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.
<PAGE> 27
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.........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.
.........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 Trustee 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
<PAGE> 28
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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.
.........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.
<PAGE> 29
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.........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 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
<PAGE> 30
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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;
(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
<PAGE> 31
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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.
.........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
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28
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 ss. 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 proceeds therefrom, the Indebtedness to Adjusted EBITDA Ratio of the
Issuer would be equal to or 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 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 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 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 (together with the amount of any Indebtedness then outstanding and
Incurred pursuant to clause (b)(vi) of Section 4.4) at any one time outstanding
not to exceed the greater of (x) $25.0 million and (y) an amount equal to 7.5%
of the Issuer's Consolidated Tangible Assets; 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 by a Restricted
Subsidiary pursuant to this Indenture;
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29
(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 either (x) the Issuer would be permitted to incur at least $1.00 of
additional Indebtedness pursuant to paragraph (a) of this Section 4.3 or (y) the
Issuer would have an Indebtedness to Adjusted EBITDA Ratio immediately after
giving effect to such merger no greater than the Indebtedness to Adjusted EBITDA
Ratio immediately prior to such merger; (ix) 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), 2.0 times the sum of 100% of the aggregate Net Cash
Proceeds and 50% of the non-cash proceeds received by the Issuer from the issue
or sale of Capital Stock (other than Disqualified Stock) subsequent to July 1,
1999 (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
aggregate amount of such Net Cash Proceeds used to make Restricted Payments
pursuant to clause 3(B) of paragraph (a) of Section 4.5 or applied pursuant to
clause (i)(B) of paragraph (b) of Section 4.5; (x) other Indebtedness in an
aggregate principal amount outstanding at any time not to exceed $25.0 million
(together with the amount of any Indebtedness and Preferred Stock then
outstanding and Incurred pursuant to clause (b)(x) of Section 4.4); (xi)
Indebtedness Incurred by the Issuer's Subsidiaries in compliance with Section
4.4; (xii) Indebtedness incurred under Credit Facilities, in an aggregate
principal amount outstanding at any time, together with the amount of any
Indebtedness then outstanding and incurred under Section 4.4(b)(i) of this
Indenture, not to exceed the sum of (A) the product of $200,000 times the number
of Completed Towers on the date of incurrence and (B) the product of $1,000,000
times the number of Completed Broadcast Towers on the date of such incurrence;
provided that the amount of such Indebtedness incurred pursuant to this clause
(B) does not exceed 25% of the cost of acquiring or constructing such Completed
Broadcast Towers; (xiii) Indebtedness representing the deferred payment of the
purchase price for any entity that is engaged in a Permitted Business and that
becomes a Restricted Subsidiary or the acquisition of any assets constituting a
business or line of business, as determined in good faith by the Board of
Directors of the Issuer, that is a Permitted Business, not to exceed at any one
time outstanding, together with any Indebtedness then outstanding and incurred
pursuant to Section 4.4(b)(xi) of this Indenture, 50% of the purchase price for
the related entity or business so acquired; provided, however, that after giving
effect to such acquisition and all Indebtedness incurred in connection
therewith, either (A) the Issuer would have been able to incur at least $1.00 of
additional Indebtedness under this Section 4.3 or (B) the Issuer would have had
an Indebtedness to Adjusted EBITDA Ratio no greater than prior to such
transaction; and (xiv) Permitted Acquisition Indebtedness.
.........(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
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30
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 earlier of 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 (and may from time to time reclassify) 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 equal to or 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 Credit Facilities in an aggregate
principal amount outstanding at any time (together with the amount of any
Indebtedness then outstanding and incurred under clause (b)(xii) of Section 4.3)
not to exceed the sum of (x) the product of $200,000 times the number of
Completed Towers on the date of such Incurrence; and (y) the product of
$1,000,000 times the number of Completed Broadcast Towers on the date of such
Incurrence, provided that the amount of such Indebtedness incurred pursuant to
this clause (y) does not exceed 25% of the cost of acquiring or constructing
such Completed Broadcast Towers; (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 Issuer 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 prior to the date on
which such Restricted Subsidiary was acquired by the Issuer and Indebtedness or
Preferred Stock of an entity merged into a Restricted Subsidiary (other than, in
either case, 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 or such entity was merged into such Restricted Subsidiary); provided,
however, that on the date of such acquisition or merger and after giving effect
thereto, either
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31
(x) the Issuer would have been permitted to incur at least $1.00 or additional
Indebtedness pursuant to paragraph (a) of Section 4.3 or (y) the Issuer would
have had an Indebtedness to Adjusted EBITDA Ratio immediately after giving
effect to such merger or acquisition no greater than the Indebtedness to
Adjusted EBITDA Ratio immediately prior to such transaction; (iv) Indebtedness
or Preferred Stock outstanding on the Issue Date; (v) Refinancing Indebtedness
Incurred in respect of Indebtedness or Preferred Stock referred to in paragraph
(a) above or in clauses (iii) or (iv) of this paragraph or this clause (v);
provided, however, that Indebtedness of the Issuer may not be refinanced
pursuant to this clause (v); (vi) Indebtedness (including Capitalized Lease
Obligations) Incurred by a Subsidiary to finance the acquisition, construction
or improvement of fixed or capital assets in an aggregate principal amount at
any one time outstanding (together with the amount then outstanding and Incurred
pursuant to clause (b)(iv) of Section 4.3) not to exceed the greater of (x)
$25.0 million and (y) an amount equal to 7.5% of the Issuer's Consolidated
Tangible Assets; 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, by a Subsidiary, of Indebtedness otherwise permitted
to be Incurred by the Issuer or a Subsidiary pursuant to this Indenture;
provided that any Subsidiary which guarantees the 2008 Notes or the 2009 Notes
will guarantee the Notes; any Subsidiary that guarantees the Notes will
guarantee the Senior Notes; any Subsidiary that guarantees the Senior Notes will
guarantee the Notes; in each case on substantially similar terms; (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)(ix) of Section 4.3), 2.0 times (A) the sum of 100% of the aggregate
Net Cash Proceeds and 50% of the non-cash proceeds received by the Issuer from
the issue or sale of Capital Stock (other than Disqualified Stock) subsequent to
July 1, 1999, other than an issuance or sale to a Subsidiary or to an employee
stock ownership plan or to a trust established by the Issuer or any Restricted
Subsidiary, less (B) the amount of such Net Cash Proceeds used to make
Restricted Payments pursuant to clause 3(B) of paragraph (a) of Section 4.5 or
applied pursuant to clause (i)(B) of paragraph (b) of Section 4.5; (x) other
Indebtedness and Preferred Stock in an aggregate principal and/or liquidation
amount outstanding at any time not to exceed $25.0 million (less the amount of
any Indebtedness then outstanding and Incurred pursuant to clause (b)(x) of
Section 4.3); (xi) Indebtedness representing the deferred payment of the
purchase price for any entity that is engaged in a Permitted Business and that
becomes a Restricted Subsidiary or the acquisition of any assets constituting a
business or line of business, as determined in good faith by the Board of
Directors of the Issuer, that is a Permitted Business, not to exceed at any one
time outstanding, together with any Indebtedness then outstanding and incurred
pursuant to Section 4.3(b)(xiii) of this Indenture, 50% of the purchase price
for the related entity or business so acquired; provided, however, that after
giving
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32
effect to such acquisition and all Indebtedness incurred in connection
therewith, either (A) the Issuer would have been able to incur at least $1.00 of
additional Indebtedness under Section 4.3 or (B) the Issuer would have had an
Indebtedness to Adjusted EBITDA Ratio no greater than prior to such transaction;
and (xii) Permitted Acquisition Indebtedness.
.........(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 (and may from time to time reclassify) 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 4.4 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
.........This 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)
except with respect to making an Investment, 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
July 1, 1999 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)(ix) 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 July 1, 1999 (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
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(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 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)(ix) 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, (D) such
new Indebtedness has an Average Life equal to or greater than the lesser of the
Average Life of the Indebtedness being so redeemed, repurchased, acquired, or
retired, and the Average Life of the Notes, and (E) any purchase, redemption,
defeasance or other acquisition made pursuant to this clause (b)(ii) 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 former employees in an
amount not to exceed $5.0 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
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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.
.........The amount of any Investment shall be measured on the date
made and shall not give effect to subsequent changes in value.
.........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 a Credit Facility or any agreement in effect on the Issue Date; (2)
any encumbrance or restriction with respect to a Restricted Subsidiary pursuant
to an agreement relating to any Indebtedness or Capital Stock Incurred or issued
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 or Capital Stock Incurred or issued as consideration for, or to
provide 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 or such lease, license or other such 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; (7)
customary provisions with respect to the disposition or distribution of assets
or property in joint venture and other similar agreements; and (8) restrictions
on cash or other deposits or net worth imposed by customers under contracts
entered into in the ordinary course of business; provided that the Board of
Directors of the Issuer in good faith determines that such restrictions will not
have a material adverse impact on the Issuer's ability to make payments on the
Notes.
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.........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 Restricted Subsidiary
(provided, that the applicable Restricted 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) make an offer with respect to the 2008 Notes or the 2009 Notes to
the extent required in the indentures governing the 2008 Notes and 2009 Notes;
(C) acquire all or substantially all of the assets of an entity engaged in a
Permitted Business; (D) 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 Voting Stock and (y) such acquisition is otherwise made in
accordance with this Indenture, including, without limitation, Section 4.5; or
(E) 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), (D)
or (E), 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 $10.0 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
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36
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 $10.0 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) (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
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37
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). 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 $5.0 million, the terms of such
transaction are set forth in writing
<PAGE> 42
38
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 $10.0 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 of the Issuer, or any arrangements relating thereto, (iii) the grant
of stock options or similar rights to employees and directors of the Issuer
pursuant to plans approved by the Board of Directors of the Issuer, (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, (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 sale of any Capital Stock (other than
Disqualified Stock) of the Issuer, (viii) any transaction consummated pursuant
to the terms of any agreement described in the Form 10-K for the year ended
December 31, 1999, including the exhibits and documents included by reference
therein, giving effect to any subsequent supplements, amendments, modifications
or alterations thereof that are approved by the disinterested members of the
Issuer's Board of Directors, (ix) any transaction in the ordinary course of
business between the Issuer or any Restricted Subsidiary and any Affiliate of
the Issuer relating to the acquisition, management, construction, leasing or
licensing of Tower Assets, provided, however, that such transaction is on terms
that are no less favorable, taken as a whole, to the Issuer or the relevant
Restricted Subsidiary than those that could have been obtained in a comparable
transaction by the Issuer or such Restricted Subsidiary with an unrelated Person
or is otherwise on terms that, taken as a whole, the Issuer has determined to be
fair to the Issuer or the relevant Restricted Subsidiary) and (x) any
transaction between the Issuer or any of its Restricted Subsidiaries and any of
its Affiliates involving ordinary course investment banking, commercial banking
or related activities.
.........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, in accordance
with the terms contemplated in Section 4.9(b).
.........(b) 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:
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39
(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;
(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.
.........(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.
<PAGE> 44
40
.........(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 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), 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 Subsidiary unless in either case (a) the Issuer's and Restricted
Subsidiary's minority equity interest in such Person, after giving effect to any
such disposition, would be permitted under Section 4.5; and (b) the net cash
proceeds from such transfer, conveyance, sale, lease or other disposition are
applied in accordance with Section 4.7.
.........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.
.........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
<PAGE> 45
41
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 ss. 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.
.........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
<PAGE> 46
42
or any of its Restricted Subsidiaries; provided, however, that the Issue 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.
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 ind 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
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43
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 (A) in the case of a merger of the Issuer into a
Wholly Owned Subsidiary, (B) a merger entered into solely for the
purpose of reincorporating the Issuer in another jurisdiction or (C) a
merger the Issuer enters into solely for the purpose of forming a
holding company to hold all of the outstanding capital stock of the
Issuer, 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, either (x) would have been permitted to incur at least
$1.00 of additional Indebtedness under Section 4.3(a) or (y) would have
had an Indebtedness to Adjusted EBITDA Ratio immediately after giving
effect to such consolidation, merger, conveyance, transfer, lease or
other disposition no greater than the Indebtedness to Adjusted EBITDA
Ratio immediately prior to such transaction; 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
.........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 or mandatory 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
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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
$10.0 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;
(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; or
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(9) any final judgment or decree for the payment of money in
excess of $10.0 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 $10.0 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.
.........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
it obtains knowledge of the occurrence thereof, written notice in the form of an
Officer's Certificate of any Event of Default under clause (6) 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.
.........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
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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 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;
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(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 at
maturity 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 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;
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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.
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
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(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 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.
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50
.........(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. 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
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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 ss. 313(a). The Trustee also shall comply with TIA ss.
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 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.
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.........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 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.
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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 ss. 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 ss. 310(a). The Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition. The Trustee shall comply with
TIA ss. 310(b); provided, however, that there shall be excluded from the
operation of TIA ss. 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 ss. 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Issuer
. The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss.311(b). A Trustee who has resigned or been removed
shall be subject to TIA ss. 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
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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
(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
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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.
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, in the good faith
opinion of the Board of Directors of the Issuer, 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
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58
(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;
(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
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59
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 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.
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; 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.
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:
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60
if to the Issuer:
SpectraSite Holdings, Inc.
100 Regency Forest Drive, Suite 400
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. Except for a notice to the Trustee, which is deemed given only when
received, and except as otherwise provided in this Indenture, 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 ss. 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 ss.
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
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61
(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.
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
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
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62
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
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 provision 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.
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63
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/ Margaret M. Ciesmelewski
------------------------------
Name: Margaret M. Ciesmelewski
Title: Assistant Vice President
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64
RULE 144A/REGULATION S APPENDIX
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 2010
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 2010,
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 2010, if any, to be issued pursuant to this Indenture to the Initial
Purchasers in a Private Exchange.
"Purchase Agreement" means the Purchase Agreement dated March
10, 2000, among the Issuer and the Initial Purchasers.
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65
"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 March 15, 2000 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
Defined
Term in Section
--------- -----------------
"Agent Members" 2.1(b)
"Global Note" 2.1(a)
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 I 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 direct), and registered in
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66
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 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. $559,800,000 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. $559,800,000
except as provided in Section 2.7 of this Indenture.
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2.3. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. (i) The transfe
and exchange of Global Notes or beneficial interests therein shall be effected
through the Depositary, in accordance with this Indenture (including applicable
restrictions on 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 HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS,
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT), OR (B) IT IS AN "INSTITUTIONAL
ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OR
REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR")
OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE
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68
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES
ACT, (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT
(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL
BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE
UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH
TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES AT THE TIME OF
TRANSFER OF LESS THAN $100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY
THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE, THE
HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING
TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF
THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE 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. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN
VIOLATION OF THE FOREGOING RESTRICTIONS."
(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).
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(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 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,
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70
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 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 on 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 withrespect 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
<PAGE> 75
71
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 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 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> 76
1
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 HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT
OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), OR (B)
IT IS AN "INSTITUTIONAL ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2),
(3) OR (7) OR REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL
ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE
IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES
ACT, (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE
<PAGE> 77
2
TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B)
TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF NOTES AT THE TIME OF TRANSFER OF LESS THAN
$100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS
IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER
THE SECURITIES ACT OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS NOTE, THE
HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING
TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF
THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE 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. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN
VIOLATION OF THE FOREGOING RESTRICTIONS.
[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 $535.86 OF ITS
PRINCIPAL AMOUNT AT MATURITY, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $464.14
PER $1,000 OF PRINCIPAL AMOUNT AT MATURITY, THE ISSUE DATE IS MARCH 15, 2000 AND
THE YIELD TO MATURITY IS 12.875%.
<PAGE> 78
3
SPECTRASITE HOLDINGS, INC.
No. __ Principal Amount at Maturity $__________
CUSIP NO. ______
12[ ]% Senior Discount Note due 2010
SpectraSite Holdings, Inc., a Delaware corporation, promises
to pay to __________, or registered assigns, the principal sum of
__________________________ Dollars on March 15, 2010.
Interest Payment Dates: March 15 and September 15.
Record Dates: March 1 and September 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> 79
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[FORM OF REVERSE SIDE OF INITIAL NOTE]
(Reverse of Note)
12[ ]% Senior Discount Note due 2010
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 March 15,2005, the Notes will accrete at a rate of 12[]%
per annum and be compounded semi-annually on each March 15 and September 15 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 March 15, 2005 will
accrue at the same rate but will be paid semi-annually commencing September 15,
2005, to Holders of record at the close of business on the March 1 or September
1 immediately preceding the interest payment date of March 15 and September 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.
<PAGE> 80
5
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 March 1 or September 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
March 15, 2000 (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. ss.ss. 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 $559,800,000 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
<PAGE> 81
6
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. Redemption
Except as set forth in the following paragraph, the Notes will
not be redeemable at the option of the Issuer prior to March 15, 2005.
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 March 15 of the
years set forth below:
Period Redemption Price
---------- -------------------------
2005 106.438%
2006 104.292%
2007 102.146%
2008 and thereafter 100.000%
In addition, at any time and from time to time prior to March
15, 2003, the Issuer may redeem in the aggregate up to 35% 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 112.875% 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 65% 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 90 days of the date of closing
of such Equity Offering.
<PAGE> 82
7
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.
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 March15, 2000, among the Issuer, and Morgan Stanley & Co. Incorporated,
CIBC World Markets Corp., Credit Suisse First Boston Corporation, Deutsche Bank
Securities Inc., Lehman Brothers Inc., BMO Nesbitt Burns Corp. and Scotia
Capital (USA) Inc. 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.
<PAGE> 83
8
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.
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.
<PAGE> 84
9
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 or mandatory 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 $10.0 million or its foreign
currency equivalent, (vii) certain events of bankruptcy, insolvency or
reorganization of the Issuer or any Significant Subsidiary of the Issuer or
(viii) any final judgment or decree for the payment of money in excess of $10.0
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 $10.0 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. 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.
<PAGE> 85
10
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
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.
<PAGE> 86
11
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., 100 Regency Forest Drive, Suite 400, Cary, North Carolina 27511,
Attention: Chief Financial Officer.
<PAGE> 87
12
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
<PAGE> 88
13
[ ] (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
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> 89
14
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.
Date:
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> 90
15
[TO BE ATTACHED TO GLOBAL NOTES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NO
The following increases or decreases in this Global Note
have been made:
<TABLE>
<S> <C> <C> <C> <C>
Date of Exchange Amount of decrease in Amount of increase in Principal Amount Signature of
----------------------- ---------------------- ----------------------- authorized
Principal Amount at Principal Amount at at Maturity of this ----------------------
Maturity of this Global Maturity of this Global Note officer of Trustee or
Note Global following such Notes Custodian
Note decrease or increase
</TABLE>
<PAGE> 91
1
EXHIBIT A
[FORM OF FACE OF EXCHANGE NOTE
[OR PRIVATE EXCHANGE NOTE]]
1
2
3
SPECTRASITE HOLDINGS, INC.
No.__ Principal Amount at Maturity $________________
CUSIP NO.__________
12[ ]% Senior Discount Note Due 2010
SpectraSite Holdings, Inc., a Delaware corporation, promises
to pay to _____________, or registered assigns, the principal sum of
__________________ Dollars on March 15, 2010.
<PAGE> 92
2
Interest Payment Dates: March 15 and September 15.
Record Dates: March 1 and September 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> 93
3
[FORM OF REVERSE SIDE OF EXCHANGE NOTE
[OR PRIVATE EXCHANGE NOTE]]
12[ ]% Senior Discount Note due 2010
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 March 15, 2005, the Notes will accrue at a rate of 12[]%
per annum and be compounded semi-annually on each March 15 and September 15 from
March 15, 2000 to March 15, 2010 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 March 15, 2005 will accrue at the same rate but will be paid
semi-annually commencing September 15, 2005, to Holders of record at the close
of business on the March 1 or September 1 immediately preceding the interest
payment date of March 15 and September 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 March 1 or September 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 an interest check to a Holder's registered address.
<PAGE> 94
4
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
March 15, 2000 (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 (I5 U.S.C. ss.ss. 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 $559,800,000 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 the Issuer and its Restricted Subsidiaries to restrict distributions and
dividends from Restricted Subsidiaries.
<PAGE> 95
5
5. Redemption
Except as set forth in the following paragraph, the Notes will
not be redeemable at the option of the Issuer prior to March 15, 2005.
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 March 15 of the
years set forth below:
Period Redemption Price
------------ --------------------
2005 106.438%
2006 104.292%
2007 102.146%
2008 and thereafter 100.000%
In addition, at any time and from time to time prior to March
15, 2003, the Issuer may redeem in the aggregate up to 35% 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 112.875% 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 65% 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 90 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> 96
6
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.
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.
<PAGE> 97
7
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 or mandatory 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 $10.0 million or its foreign
currency equivalent, (vii) certain events of bankruptcy, insolvency or
reorganization of the Issuer or any Significant Subsidiary of the Issuer or
(viii) any final judgment or decree for the payment of money in excess of $10.0
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 $10.0 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. 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.
<PAGE> 98
8
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
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
<PAGE> 99
9
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., 100 Regency Forest Drive, Suite 400, Cary, North Carolina 27511,
Attention: Chief Financial Officer.
<PAGE> 100
10
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 5.1
April 18, 1999
SpectraSite Holdings, Inc.
100 Regency Forest Drive
Suite 400
Cary, North Carolina 27511
Ladies and Gentlemen:
We are acting as special counsel to SpectraSite Holdings, Inc., a
Delaware corporation (the "Issuer"), in connection with its registration
statement on Form S-4 (the "Registration Statement") filed with the Securities
and Exchange Commission (the "Commission"), for the purpose of registering under
the Securities Act of 1933, as amended (the "Securities Act"), the Issuer's: (i)
$200,000,000 aggregate principal amount of Series B 10 3/4% Senior Notes Due
2010 (the "New Cash-Pay Notes"), which are being issued by the Issuer in
exchange for the Issuer's outstanding 10 3/4% Senior Notes Due 2010, with terms
substantially identical to the New Cash-Pay Notes (the "Old Cash-Pay Notes");
and (ii) $559,800,000 aggregate principal amount at maturity of Series B 12 7/8%
Senior Discount Notes Due 2010 (the "New Discount Notes, and together with the
New Cash-Pay Notes, the "Exchange Notes"), which are being issued by the Issuer
in exchange for the Issuer's outstanding 12 7/8% Senior Discount Notes Due 2010,
with term substantially identical to the New Discount Notes ( the "Old Discount
Notes" and together with the Old Cash-Pay Notes, the "Old Notes"). The Old Notes
were issued under, and the Exchange Notes are to be issued under, Indentures,
each dated as of March 15, 2000, and each between the Issuer and United States
Trust Company of New York, as Trustee (the "Indentures").
In connection with the foregoing registration, we have acted as special
counsel for the Issuer and have examined originals or copies of (i) the
Indentures, (ii) the Registration Rights Agreement, dated as of March 15, 2000
(the "Registration Rights Agreement"), by and among the Issuer, Morgan Stanley &
Co. Incorporated, CIBC World Markets Corp., Credit Suisse First Boston
Corporation, Deutsche Bank Securities Inc., Lehman Brothers Inc., BMO Nesbitt
Burns Corp. and Scotia Capital (USA) Inc., and (iii) the Registration Statement.
We have also examined all such records of the Issuer and all such agreements,
certificates of public officials, certificates of officers or representatives of
the Issuer and others, and such other documents, certificates and corporate or
other records as we have deemed necessary or appropriate as a basis for the
opinion set forth herein. In our examination we have assumed the genuineness of
all signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. As to any facts relevant
to the opinion expressed herein, we have relied upon statements and
representations of
<PAGE> 2
April 18, 2000
Page 2
officers and other representatives of the Issuer and others (all of which we
assume to be true, complete and accurate in all respects).
As to matters of law set forth below, our opinion is limited to matters
of law under the laws of the District of Columbia, the laws of the State of New
York to the extent that the Indentures, the Old Notes and the Exchange Notes are
governed thereby, the laws of the United States to the extent applicable hereto,
and the Delaware General Corporation Law, and we express no opinion as to
conflicts of law rules, or the laws of any states or jurisdictions other than as
specified above.
Based upon the foregoing and subject to the other qualifications,
assumptions and limitations stated herein, we are of the opinion that the
Exchange Notes have been duly authorized and when executed by the proper
officers of the Issuer, duly authenticated by the Trustee, and issued by the
Issuer in accordance with the provisions of the Indentures, against surrender
and cancellation of a like aggregate principal amount and aggregate principal
amount at maturity of Old Cash-Pay Notes and Old Discount Notes, respectively,
pursuant to the Exchange Offer as contemplated in the Registration Rights
Agreement, will constitute the legal, valid and binding obligations of the
Issuer enforceable against the Issuer in accordance with their terms, except to
the extent that (a) the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium (whether general or specific), fraudulent
conveyance or other laws now or hereafter in effect affecting the enforcement of
creditors' rights and remedies generally, and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be limited by
equitable defenses and the discretion of the court before which any proceeding
therefor may be brought (whether such proceeding is at law or in equity or in a
bankruptcy proceeding) and that the enforceability thereof may be limited by
other equitable principles of general applicability, including without
limitation concepts of materiality, reasonableness, good faith, and fair dealing
and the power of a court to declare the waiver as to usury, stay or extension
laws to be unenforceable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement, and to the reference to this firm under the caption
"Legal Matters" contained in the prospectus filed as a part thereof. In giving
such consent, we do not thereby admit that we are in the category of persons
whose consent is required under Section 7 of the Securities Act.
Very truly yours,
DOW, LOHNES & ALBERTSON, PLLC
/s/ Timothy J. Kelley
-----------------------------
Timothy J. Kelley
Member
-2-
<PAGE> 1
EXHIBIT 10.28
FOURTH AMENDMENT TO CREDIT AGREEMENT
This FOURTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is
entered into as of March 9, 2000, by and among SpectraSite Communications,
Inc., a Delaware corporation (the ABorrower@), SpectraSite Holdings, Inc., a
Delaware corporation ("Holdco"), CIBC World Markets Corp. and Credit Suisse
First Boston, as arrangers (the "Arrangers"), Credit Suisse First Boston, as
syndication agent (the "Syndication Agent"), Canadian Imperial Bank of Commerce,
as administrative agent (the "Administrative Agent"), Canadian Imperial Bank of
Commerce, as collateral agent (the "Collateral Agent") and the other Credit
Parties signatory hereto (the "Credit Parties").
W I T N E S S E T H:
WHEREAS, the Borrower, Holdco, the Arrangers, the Syndication
Agent, the Administrative Agent, the Collateral Agent and the Credit Parties are
parties to that certain Credit Agreement dated as of April 20, 1999, as amended
by that certain First Amendment to Credit Agreement dated as of August 23, 1999,
as further amended by that certain Second Amendment to Credit Agreement dated as
of December 22, 1999, as further amended by that certain Third Amendment to
Credit Agreement dated as of February 14, 2000 (as the same may be further
amended, restated, supplemented or otherwise modified from time to time, the
ACredit Agreement@); and
WHEREAS, the Borrower and Holdco have requested, and the
Arrangers, the Syndication Agent, the Administrative Agent, the Collateral Agent
and the Credit Parties have agreed, to amend the Credit Agreement as and to the
extent set forth herein;
NOW THEREFORE, in consideration of the premises set forth above,
the terms and conditions contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree that all capitalized terms used herein shall have the
meanings ascribed thereto in the Credit Agreement, as amended hereby, except as
otherwise defined or limited herein, and further agree, subject to the
conditions precedent to this Amendment hereinafter set forth, as follows:
1. Amendments to Article 1.
(a) Article 1 of the Credit Agreement, Definitions,
is hereby modified and amended by adding the following new definitions to be
placed in appropriate alphabetical order:
"Additional Telecorp Towers" shall mean up to 250 Towers
(such number being subject to increase or decrease based on
negotiations between the Borrower and Telecorp) to be constructed
or acquired by the Borrower, from time to time, for lease
1
<PAGE> 2
to Telecorp pursuant to the future tower commitment set forth in
the Telecorp Purchase Documents.
"Fourth Amendment" shall mean the Fourth Amendment to
this Agreement dated as of March ___, 2000.
"Holdco 2010 Notes" shall mean shall mean the Senior
Notes and the Senior Discount Notes, in each case due 2010 issued
by Holdco pursuant to the terms and conditions of the Indenture
For 2010 Notes.
"Holdco Equity Offering" shall mean the issuance and sale
by Holdco of 25,645,000 shares of its common Capital Stock that
was consummated on or about February 1, 2000.
"Indenture For 2010 Notes" shall mean, collectively, that
certain Senior Notes Indenture to be entered into by Holdco, as
issuer, and United States Trust Company of New York, as trustee,
in respect of the Holdco 2010 Notes, and that certain Senior
Discount Notes Indenture to be entered into by Holdco, as issuer,
and United States Trust Company of New York, as trustee, in
respect of the Holdco 2010 Notes, which Indentures shall provide,
among other things, that (a) interest payable on the Holdco 2010
Notes may be paid at a coupon no greater than, (i) with respect to
the Senior Notes, 12.5%, and (ii) with respect to the Senior
Discount Notes, 14.5%, (b) interest shall not be payable with
respect to more than $200,000,000 of the Holdco 2010 Notes prior
to the expiration of the Five Year PIK Period except from a
Pre-Funded Interest Account, and (c) the Holdco 2010 Notes shall
have no required cash redemptions (other than customary change of
control redemption provisions) or principal maturities prior to
the Tranche B Maturity Date.
"Target Acquisition" shall mean that certain Acquisition
of Tower Assets in conjunction with up to 110 Tower Sites, which
shall be consummated by the Borrower on terms and conditions
reasonably satisfactory to the Administrative Agent, for an
aggregate Purchase Price not to exceed $180,000,000.
"Telecorp" shall mean Telecorp PCS, Inc., a [_________]
corporation.
"Telecorp Acquisition" shall mean the Acquisition by the
Borrower of certain Tower Assets from Telecorp including
approximately 205 Tower Sites for an aggregate Purchase Price of
approximately $61,500,000, and the related lease to Telecorp,
under a master lease agreement, of space on such Towers (and any
Additional Telecorp Towers) and ground space on the land in the
vicinity of such Towers (and any Additional Telecorp Towers),
pursuant to the terms and conditions of the Telecorp Purchase
Documents.
2
<PAGE> 3
"Telecorp Purchase Documents" shall mean the documents
relating to the Telecorp Acquisition, which shall contain terms
and conditions reasonably satisfactory to the Administrative
Agent, as such documents may be amended from time to time,
together with all schedules and exhibits thereto and other
documents executed in connection therewith.
"UK Investment" shall mean the Investment (including the
purchase of approximately fifty percent (50%) of the issued and
outstanding equity interests in such joint venture) by Holdco,
directly or indirectly, in a joint venture with an entity
organized under the laws of the United Kingdom and having a market
capitalization in excess of $5,000,000,000, for the purpose of
engaging in the business of owning, leasing, managing,
Abuilding-out@ and constructing Towers in the United Kingdom and
Europe, in an aggregate amount not to exceed, (a) with respect to
stock consideration, $100,000,000 in common Capital Stock of
Holdco (or assets of Holdco acquired in connection with the
issuance of such Capital Stock), and (b) with respect to cash
consideration, $100,000,000 in cash.
"UK Acquisition Documents" shall mean the documents
relating to the UK Investment, as amended from time to time, and
all schedules and exhibits thereto and other documents executed in
connection therewith."
(b) Article 1 of the Credit Agreement, Definitions,
is hereby further modified and amended by deleting the existing definition of
AIndentures@ and by substituting the following in lieu thereof:
"Indentures" shall mean, collectively, the Indenture For
2008 Notes, the Indenture For 2009 Notes and the Indenture For
2010 Notes."
(c) Article 1 of the Credit Agreement, Definitions,
is hereby further modified and amended by deleting the existing definition of
APre-Approved Transactions@ and by substituting the following in lieu thereof:
"Pre-Approved Transactions= shall mean, collectively, the
Apex Acquisition, the DigiPH Acquisition, the UbiquiTel
Investment, the AirTouch Acquisition, the UK Investment, the
Nextel 2 Acquisition, the Telecorp Acquisition and the
Acquisitions described in Sections 8.5(xiii) and (xv) hereof."
(d) Article 1 of the Credit Agreement, Definitions,
is hereby further modified and amended by deleting the existing definition of
"Pre-Approved Transaction Documents" and by substituting the following in lieu
thereof:
"Pre-Approved Transaction Documents= shall mean,
collectively, the Westower Merger Agreement, the NTA Investment
Documents, the Apex Acquisition Documents, the DigiPH Purchase
Documents, the UbiquiTel Investment Documents,
3
<PAGE> 4
the AirTouch Purchase Documents, the Nextel 2 Purchase
Documents, UK Investment Documents, the Telecorp Purchase
Documents, the documents relating to the acquisition of
Additional Nextel Towers and the documents relating to the
Acquisitions described in Section 8.5(xiii) and (xv) hereof
(including all schedules and exhibits thereto)."
(e) Article 1 of the Credit Agreement, Definitions,
is hereby further modified and amended by adding the following sentence at the
end of the existing definition of "Subsidiary":
"Notwithstanding anything contained in the foregoing to
the contrary, neither the UK Investment nor any entity formed for
the purpose of making the UK Investment that is owned, directly or
indirectly, by Holdco shall be deemed a Subsidiary of Holdco or
the Borrower for purposes of this Agreement."
2. Amendment to Section 2.7. Section 2.7 of the Credit Agreement,
Mandatory Repayments, is hereby modified and amended by deleting the
parenthetical beginning in the second line of subsection (c) and by substituting
the following in lieu thereof:
"(other than the issuance of the Holdco 2009 Notes in an
amount not to exceed $340,003,656 and the issuance of the Holdco
2010 Notes in an amount not to exceed $500,000,000)"
3. Amendment to Section 5.1. Section 5.1(h) of the Credit
Agreement, Title to Assets, is hereby modified and amended by deleting the last
sentence therefrom and by substituting the following in lieu thereof:
"Tower Sub does not own any material Assets other than Tower
Assets comprising the Nextel Collateral and Tower Space Lease
Agreements with Co-Locators on Towers comprising the Nextel
Collateral, and Holdco does not own any material Assets other than
(i) the Capital Stock of the Borrower, (ii) the UK Investment (or
the Capital Stock of any entity formed for the purpose of making
the UK Investment), (iii) the Capital Stock of any shell
Subsidiary formed by Holdco solely for the purpose of consummating
any Permitted Acquisition, and (iv) on the closing date of any
Permitted Acquisition, the Capital Stock of any target company
acquired in connection with such Permitted Acquisition immediately
prior to the contribution of such Capital Stock to the Borrower."
4. Amendment to Section 6.2. Section 6.2 of the Credit Agreement,
Business; Compliance with Applicable Law, is hereby amended by deleting the
second sentence therefrom and substituting the following in lieu thereof:
"Holdco will engage solely in the business of holding the
Capital Stock of (a) the Borrower, (b) the UK Investment (or the
Capital Stock of any entity formed for
4
<PAGE> 5
the purpose of making the UK Investment), (c) any shell
Subsidiary formed by Holdco solely for the purpose of
consummating any Permitted Acquisition, and (d) on the closing
date of any Permitted Acquisition, any target company
acquired in connection with such Permitted Acquisition
immediately prior to the contribution of such Capital Stock to the
Borrower."
5. Amendments to Section 6.16.
(a) Section 6.16 of the Credit Agreement, Covenants
Regarding Formation of Subsidiaries and the Making of Investments and
Acquisitions, is hereby modified and amended by deleting the parenthetical
beginning after the words Asuch Subsidiary or Person@ in clause (b) of the
first sentence and by substituting the following in lieu thereof:
"(other than (i) the Foreign Westower Subsidiaries, in which case
the pledge shall be of sixty-five percent (65%) (or in the case of
Westower Highlight Do Brazil, sixty percent (60%)) of the Capital
Stock of such Subsidiary and (ii) the UK Investment (or the
Capital Stock of any entity formed for the purpose of making the
UK Investment))"
(b) Section 6.16 of the Credit Agreement, Covenants
Regarding Formation of Subsidiaries and the Making of
Investments and Acquisitions, is hereby further modified and amended by
inserting A(other than the UK Investment (or the Capital Stock of any entity
formed for the purpose of making the UK Investment))@ immediately following the
words Aafter the Agreement Date@ in the second sentence thereof.
6. Amendment to Article 6. Article 6 of the Credit Agreement,
Affirmative Covenants, is hereby modified and amended by adding the following
new Section 6.17 at the end thereof:
"Section 6.17 Special Purpose Vehicles. The Borrower shall
form one or more special purpose Subsidiaries (the ASPVs") for the
purpose of holding and making Acquisitions of Tower Assets
permitted under Section 8.5 hereof, and with respect to all such
Acquisitions completed on and after March ___, 2000, the Borrower
shall, and shall cause each of its Subsidiaries to, contribute all
Towers and Tower Assets acquired by the Borrower or such
Subsidiary to an SPV. The Borrower shall comply with Section 6.16
hereof in respect of each SPV. Notwithstanding anything to the
contrary contained in this Agreement, the following provisions
shall apply with respect to SPVs: (a) any SPV may transfer Tower
Assets to Tower Sub to the extent that such Tower Assets shall
constitute Future Nextel Towers; (b) none of the SPVs may make
Investments otherwise permitted to be made by Subsidiaries of the
Borrower pursuant to Section 8.2 or 8.5(v) hereof; (c) none of the
SPVs may liquidate or dissolve itself (or suffer any liquidation
or dissolution), or enter into any merger, consolidation or other
business combination (except with another SPV), otherwise
permitted to be made by Subsidiaries of the Borrower pursuant to
Section
5
<PAGE> 6
8.5(ii) hereof; (d) none of the SPVs may form
Subsidiaries; (e) SPVs may transfer Assets freely amongst
themselves, but not to the Borrower or any other Subsidiary of the
Borrower that does not constitute an SPV; (f) none of the SPVs
shall create, assume, incur or remain obligated in respect of, or
permit to be outstanding, any Indebtedness except for trade or
accounts payable and other obligations, and accrued expenses,
incurred in the ordinary course of business, other than for
borrowed money; and (g) none of the SPVs shall be obligated in
respect of any Guaranty of the performance obligations of the
Borrower or any of its Subsidiaries (other than under the Loan
Documents). Neither Tower Sub nor California Sub shall be deemed
SPVs for purposes of this Agreement."
7. Amendments to Section 8.1.
(a) Section 8.1 of the Credit Agreement, Indebtedness,
is hereby modified and amended by deleting clause (i) from subsection (h) and by
substituting the following in lieu thereof:
"(i) Indebtedness represented by the Holdco 2008 Notes, the Holdco
2009 Notes and the Holdco 2010 Notes,"
(b) Section 8.1 of the Credit Agreement, Indebtedness, is
hereby further modified and amended by deleting
clause (iii) from subsection (h) and by substituting the following in lieu
thereof:
"(iii) accrual of interest, accrual of dividends, the accretion of
accreted value, the payment of interest in the form of additional
Indebtedness and the payment of dividends in the form of
additional shares in respect of the Holdco 2008 Notes, the Holdco
2009 Notes, the Holdco 2010 Notes or any other Permitted
High-Yield Securities,"
(c) Section 8.1 of the Credit Agreement, Indebtedness, is
hereby further modified and amended by deleting
the phrase Aeither of the Indentures" from clause (iv) of subsection (h) and by
substituting Aany of the Indentures" in lieu thereof.
8. Amendments to Section 8.5.
(a) Section 8.5 of the Credit Agreement, Liquidation;
Merger; Acquisition or Disposition of Assets, is hereby modified and amended by
deleting existing subsection (xii) thereof and substituting the following in
lieu thereof:
"(xii) so long as no Default or Event of Default then
exists or would be caused thereby, subject to compliance with
Sections 6.10 and 6.16 hereof, (A) the Borrower and its
Subsidiaries (other than Tower Sub and California Tower) may
consummate each of the Pre-Approved Transactions (other than the
Nextel 2
6
<PAGE> 7
Acquisition, the UK Investment and the transaction described
in clause (xiii) below), and (B) the Borrower may construct
or purchase the Additional Telecorp Towers; provided, however,
that with respect to the Telecorp Acquisition, the Borrower
shall provide the Arrangers with evidence satisfactory to them
that Holdco shall have received at least $400,000,000 of
proceeds in connection with the issuance of the 2010 Notes (or, in
the alternative, provide the Arrangers and the Lenders
calculations demonstrating pro forma compliance with the Financial
Covenants after giving effect to the Telecorp Acquisition)."
(b) Section 8.5 of the Credit Agreement, Liquidation;
Merger; Acquisition or Disposition of Assets, is hereby further modified and
amended by adding the following new subsections (xiv) and (xv) at the end
thereof:
"(xiv) so long as no Default or Event of Default then
exists or would be caused thereby, and notwithstanding anything to
the contrary contained herein or in any Loan Document, Holdco may,
directly or indirectly, make and hold the UK Investment, so long
as the cash portion of the Purchase Price is from the Net Proceeds
received by Holdco in connection with the issuance of the Holdco
2010 Notes or the Holdco Equity Offering; and
"(xv) so long as (A) no Default or Event of Default then
exists or would be caused thereby, (B) the Borrower shall provide
the Arrangers with evidence satisfactory to them that Holdco shall
have received at least $400,000,000 of proceeds in connection with
the issuance of the 2010 Notes (or, in the alternative, provide
the Arrangers and the Lenders calculations demonstrating pro forma
compliance with the Financial Covenants after giving effect to
such Acquisition), and (C) the Borrower shall provide the
Administrative Agent with evidence satisfactory to it that the
revenue and cash flow acquired by the Borrower in connection with
the Target Acquisition shall have no material negative deviations
from the projected revenue and cash flow relating to the Target
Acquisition as set forth in the Borrower=s Projections delivered
to the Administrative Agent in connection with the Fourth
Amendment, the Borrower may, subject to compliance with Sections
6.10, 6.16 and 6.17 hereof, consummate the Target Acquisition."
9. Amendments to Section 8.7.
(a) Section 8.7 of the Credit Agreement, Restricted
Payments and Purchases, is hereby modified and amended by deleting clause (a)
and by substituting the following in lieu thereof:
"(a) (i) interest payments on the Holdco 2008 Notes and on the
Holdco 2009 Notes, (ii) interest payments on the Holdco 2010
Notes, and (iii) interest or dividend payments, as applicable, on
Permitted High-Yield Securities issued on or before the
8
<PAGE> 8
Agreement Date, in the case of clauses (i) and (iii), following
expiration of the Five Year PIK Period or from a
Pre-Funded Interest Account,"
(b) Section 8.7 of the Credit Agreement, Restricted
Payments and Purchases, is hereby further modified and
amended by deleting clause (e) and by substituting the following in lieu thereof
"(e) payments of >Additional Interest= (as that term is defined in
the Registration Rights Agreements entered into in connection with
the Holdco 2008 Notes, the Holdco 2009 Notes and the Holdco 2010
Notes) and any other comparable payments in respect of other
Permitted High-Yield Securities"
10. Amendment to Section 8.9. Section 8.9 of the Credit Agreement,
Corporate Name; Corporate Structure; Business, is hereby amended by deleting
subsection (b) therefrom and by substituting the following in lieu thereof:
"(b) with respect to the Borrower and its Subsidiaries,
engage in any businesses other than the Tower Operations and the
Other Operations and activities related or incident thereto, and
with respect to Holdco, engage in any business other than that of
holding the Capital Stock of (i) the Borrower, (ii) the UK
Investment (or the Capital Stock of any entity formed for the
purpose of making the UK Investment), (iii) any shell Subsidiary
formed by Holdco solely for the purpose of consummating any
Permitted Acquisition, and (iv) on the closing date of any
Permitted Acquisition, any target company acquired in connection
with such Permitted Acquisition immediately prior to the
contribution of such Capital Stock to the Borrower"
11. Amendment to Section 10.1. Section 10.1 of the Credit
Agreement, Events of Default (Senior Obligations), is hereby modified and
amended by deleting the phrase Aeither of the Indentures" from subsection (m)
and by substituting Aany of the Indentures@ in lieu thereof.
12. No Other Amendments, Waivers or Consents. Except for the
amendments, waivers and consents set forth above, the text of the Credit
Agreement and the other Loan Documents shall remain unchanged and in full force
and effect, and the Arrangers, the Syndication Agent, the Administrative Agent,
the Collateral Agent and the Credit Parties hereby reserve the right to require
strict compliance with the terms of the Credit Agreement and the other Loan
Documents in the future.
13. Conditions to Effectiveness. This Amendment shall be effective
as of the date first written above (the AEffective Date@) upon the following:
(a) The Administrative Agent=s receipt of a
counterpart hereof duly executed by the Borrower and Holdco, and by the Majority
Lenders;
8
<PAGE> 9
(b) With respect to issuance of the Holdco 2010 Notes, the
Arrangers" receipt of calculations demonstrating the Borrower=s
pro forma compliance with the Credit Agreement through the Tranche
B Maturity Date; and
(c) All of the representations and warranties of Holdco
and the Borrower set forth in the Credit Agreement and this
Amendment, other than those that are expressly made as of a
specific date, are true and correct in all material respects with
the same effect as though such representations and warranties had
been made on and as of the Effective Date as though made on and as
of such date.
14. Amendment Fee. The Borrower hereby agrees to pay, on the
Effective Date, to each Lender that delivers such Lender=s written consent to
this Amendment to counsel for the Administrative Agent prior to 5:00 p.m. (New
York time) on Thursday, March 9, 2000, an amendment fee in an amount equal to
one-tenth of one percent (0.10%) of such Lender=s Revolving Commitment and Term
Loans then outstanding.
15. Conditions Subsequent. As a condition subsequent to the
amendments set forth in this Amendment, the Borrower shall perform or cause to
be performed the following (the failure by the Borrower to so perform or cause
to be performed for any reason constituting an Event of Default under the Credit
Agreement):
(a) Collateral. Promptly following the closing date for
each of the Telecorp Acquisition and the Target Acquisition, the
Borrower shall execute and deliver to the Collateral Agent all
agreements, instruments and other items required to be so
delivered pursuant to Section 6.16 of the Credit Agreement,
including, without limitation, a collateral assignment of the
Telecorp Purchase Documents in favor of the Collateral Agent; and
(b) Definitive Documentation. Promptly upon the closing of
each of the Telecorp Acquisition and the Target Acquisition, the
Borrower shall deliver to the Arrangers a full set of copies of
the documents executed in connection with each such Acquisition.
Promptly upon consummation of the transactions contemplated in
connection with the issuance of the Holdco 2010 Notes, the
Borrower shall deliver to the Arrangers a full set of copies of
the Indenture For 2010 Notes, the Holdco 2010 Notes and all
documents executed in connection therewith.
16. Representations and Warranties. Each of the Borrower and
Holdco, for itself and on behalf of each of its Subsidiaries, agrees, represents
and warrants in favor of the Arrangers, the Syndication Agent, the
Administrative Agent, the Collateral Agent and the Credit Parties that:
(a) This Amendment has been executed and delivered by duly
authorized representatives of the Borrower and Holdco, and the
Credit Agreement, as modified and amended by this Amendment,
constitutes a legal, valid and binding obligation of
9
<PAGE> 10
the Borrower and Holdco and is enforceable against the Borrower
and Holdco in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally and by the
application of general equitable principles;
(b) Before and after giving effect to this Amendment, no
Default or Event of Default with respect to the Borrower or Holdco
has occurred and is continuing;
(c) As of the date hereof and after giving effect to the
issuance of the Holdco 2010 Notes, (i) the property of the
Borrower, at a fair valuation on a going concern basis, will
exceed its debt; (ii) the capital of the Borrower will not be
unreasonably small to conduct its business; and (iii) the Borrower
will not have incurred debts, or have intended to incur debts,
beyond its ability to pay such debts as they mature; and
(d) No event contemplated in connection with the issuance
of the Holdco 2010 Notes shall occur, which has not been consented
to or waived, the occurrence of which constitutes, or with the
passage of time or giving of notice or both would constitute, a
material default by Holdco, the Borrower or any of their
respective Subsidiaries under any material indenture, agreement or
other instrument, including, without limitation, the material
Necessary Authorizations and the Indentures, or any judgment,
decree or order, to which Holdco, the Borrower or any of their
respective Subsidiaries is a party or by which Holdco, the
Borrower or any of their respective Subsidiaries or any of their
respective properties may be bound or affected.
17. Effect on the Credit Agreement. Except as specifically
provided herein, the Credit Agreement shall remain in full force and effect, and
is hereby ratified, reaffirmed and confirmed. This Amendment shall be deemed to
be a Loan Document for all purposes.
18. Counterparts. This Amendment may be executed in any number of
separate counterparts and by the different parties hereto on separate
counterparts, each of which shall be deemed an original and all of which, taken
together, shall be deemed to constitute one and the same instrument. In proving
this Amendment in any judicial proceedings, it shall not be necessary to produce
or account for more than one such counterpart signed by the party against whom
such enforcement is sought. Any signatures delivered by a party by facsimile
transmission shall be deemed an original signature hereto.
19. Law of Contract. THIS CONSENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
10
<PAGE> 11
IN WITNESS WHEREOF, this Amendment has been duly executed
as of the day and year first written above.
BORROWER: SPECTRASITE COMMUNICATIONS, INC.
By: /s/ David P. Tomick
-----------------------------------
Name: David P. Tomick
---------------------------------
Title: Executive Vice President
--------------------------------
Attest:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
HOLDCO: SPECTRASITE HOLDINGS, INC.
By: /s/ David P. Tomick
--------------------------------
Name: David P. Tomick
--------------------------------
Title: Executive Vice President
--------------------------------
Attest:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
<PAGE> 12
ADMINISTRATIVE CANADIAN IMPERIAL BANK OF
AGENT: COMMERCE
By: /s/ Colleen Risorto
--------------------------------
Name: Colleen Risorto
--------------------------------
Title: Executive Director
--------------------------------
CIBC World Markets Corp. as Agent
<PAGE> 13
ARRANGERS: CIBC WORLD MARKETS CORP.
(f/k/a CIBC Oppenheimer Corp.)
By: /s/ Colleen Risorto
--------------------------------
Name: Colleen Risorto
--------------------------------
Title: Executive Director
--------------------------------
CIBC World Markets Corp. as Agent
CREDIT SUISSE FIRST BOSTON
By: /s/ James P. Moran
--------------------------------
Name: James P. Moran
--------------------------------
Title: Director
By: /s/ Kristin Lepri
--------------------------------
Name: Kristin Lepri
--------------------------------
Title: Associate
--------------------------------
<PAGE> 14
COLLATERAL AGENT: CANADIAN IMPERIAL BANK OF COMMERCE
By: /s/ Colleen Risorto
--------------------------------
Name: Colleen Risorto
--------------------------------
Title: Executive Director
--------------------------------
CIBC World Markets Corp. as Agent
<PAGE> 15
SYNDICATION AGENT: CREDIT SUISSE FIRST BOSTON
By: /s/ James P. Moran
--------------------------------
Name: James P. Moran
--------------------------------
Title: Director
--------------------------------
By: /s/ Kristin Lepri
--------------------------------
Name: Kristin Lepri
--------------------------------
Title: Associate
--------------------------------
<PAGE> 16
MANAGING AGENTS: BANK OF MONTREAL, CHICAGO BRANCH
By: /s/ Karen Klapper
--------------------------------
Name: Karen Klapper
--------------------------------
Title: Director
--------------------------------
THE BANK OF NOVA SCOTIA
By: /s/ P.A. Weissenberger
--------------------------------
Name: P.A. Weissenberger
--------------------------------
Title: Authorized Signatory
--------------------------------
FLEET NATIONAL BANK (f/k/a BankBoston, N.A.)
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
DRESDNER BANK AG, NEW YORK AND GRAND
CAYMAN BRANCHES
By: /s/ Patrick A. Kelehe
--------------------------------
Name: Patrick A. Kelehe
--------------------------------
Title: Vice President
--------------------------------
By: /s/ Brian E. Haughne
--------------------------------
Name: Brian E. Haughney
--------------------------------
Title: Assistant Vice President
--------------------------------
TORONTO DOMINION (TEXAS), INC.
By: /s/ Ann Slanis
--------------------------------
Name: Ann Slanis
--------------------------------
Title: Vice President
--------------------------------
<PAGE> 17
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Peter C. Connoy
--------------------------------
Name: Peter C. Connoy
--------------------------------
Title: Vice President
--------------------------------
<PAGE> 18
CO-AGENT: CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Patrick McCarthy
--------------------------------
Name: Patrick McCarthy
--------------------------------
Title: Authorized Signature
--------------------------------
<PAGE> 19
LENDERS: CIBC INC.
By: /s/ Colleen Risorto
--------------------------------
Name: Colleen Risorto
--------------------------------
Title: Executive Director
--------------------------------
CIBC World Markets Corp. as Agent
<PAGE> 20
CREDIT SUISSE FIRST BOSTON
By: /s/ James P. Moran
--------------------------------
Name: James P. Moran
--------------------------------
Title: Director
--------------------------------
By: /s/ Kristin Lepri
--------------------------------
Name: Kristin Lepri
--------------------------------
Title:
--------------------------------
<PAGE> 21
BANK OF MONTREAL, CHICAGO BRANCH
By: /s/ Karen Klapper
--------------------------------
Name: Karen Klapper
--------------------------------
Title: Director
--------------------------------
<PAGE> 22
THE BANK OF NOVA SCOTIA
By: /s/ P.A. Weissenberger
--------------------------------
Name: P.A. Weissenberger
--------------------------------
Title: Authorized Signatory
--------------------------------
<PAGE> 23
FLEET NATIONAL BANK (f/k/a BankBoston, N.A.)
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
<PAGE> 24
DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES
By: /s/ Patrick A. Keleher
--------------------------------
Name: Patrick A. Keleher
--------------------------------
Title: Vice President
--------------------------------
By: /s/ Brian E. Haughney
--------------------------------
Name: Brian E. Haughney
--------------------------------
Title: Assistant Vice President
-------------------------------
<PAGE> 25
TORONTO DOMINION (TEXAS), INC.
By: /s/ Ann S. Slanis
--------------------------------
Name: Ann S. Slanis
--------------------------------
Title: Vice President
--------------------------------
<PAGE> 26
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Peter C. Connoy
--------------------------------
Name: Peter C. Connoy
--------------------------------
Title: Vice President
--------------------------------
<PAGE> 27
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Patrick McCarthy
--------------------------------
Name: Patrick McCarthy
--------------------------------
Title: Authorized Signature
--------------------------------
<PAGE> 28
THE BANK OF NEW YORK
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
<PAGE> 29
CAISSE DE DEPOT ET PLACEMENT DU QUEBEC
By: /s/ Louie Lavoie
--------------------------------
Name: Louie Lavoie
--------------------------------
Title: Manager
--------------------------------
By: /s/ Lucie Rousseau
--------------------------------
Name: Lucie Rousseau
--------------------------------
Title: Vice President
--------------------------------
<PAGE> 30
CANADIAN IMPERIAL BANK OF COMMERCE
By: /s/ Colleen Risorto
--------------------------------
Name: Colleen Risorto
--------------------------------
Title: Executive Director
--------------------------------
CIBC World Markets Corp. as Agent
<PAGE> 31
THE CIT GROUP/EQUIPMENT FINANCING, INC.
By: /s/ Daniel E. A. Nichols
--------------------------------
Name: Daniel E. A. Nichols
--------------------------------
Title Assistant Vice President
--------------------------------
<PAGE> 32
CYPRESSTREE INVESTMENT FUND, LLC
By: CypressTree Investment
Management Company, Inc., its
Managing Member
By: /s/ Peter K. Merrill
--------------------------------
Name: Peter K. Merrill
--------------------------------
Title: Managing Director
--------------------------------
<PAGE> 33
NORTHAMERICAN SENIOR FLOATING RATE FUND
By: CypressTree Investment
Management Company, Inc., its
Managing Member
By: /s/ Peter K. Merrill
--------------------------------
Name: Peter K. Merrill
--------------------------------
Title: Managing Director
--------------------------------
<PAGE> 34
CYPRESSTREE INVESTMENT MANAGEMENT COMPANY, INC.
As: Attorney-in-Fact and on behalf
of First Allmerica Financial
Life Insurance Company as
Portfolio Manager
By: /s/ Peter K. Merrill
--------------------------------
Name: Peter K. Merrill
--------------------------------
Title: Managing Director
--------------------------------
<PAGE> 35
KZH CYPRESSTREE-1 LLC
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
<PAGE> 36
FREMONT INVESTMENT & LOAN
By: /s/ Kannika Viravan
--------------------------------
Name: Kannika Viravan
--------------------------------
Title: Vice President
--------------------------------
<PAGE> 37
HELLER FINANCIAL, INC.
By: /s/ Scott Ziemke
--------------------------------
Name: Scott Ziemke
--------------------------------
Title: Assistant Vice President
--------------------------------
<PAGE> 38
MERRILL LYNCH SENIOR FLOATING RATE FUND,
INC.
By: /s/ Joseph Matteo
--------------------------------
Name: Joseph Matteo
--------------------------------
Title:
--------------------------------
<PAGE> 39
PPM AMERICA, INC., as attorney in fact,
on behalf of Jackson National Life
Insurance Company
By: /s/ John Walding
--------------------------------
Name: John Walding
--------------------------------
Title: Managing Director
--------------------------------
<PAGE> 40
Fleet National Bank (f/k/a BankBoston,
N.A.), as Trust Administrator for
LONGLANE MASTER TRUST IV
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
<PAGE> 41
GALAXY CLO 1999-1, LTD.
By: SAI Investment Advisor, Inc.,
its Collateral Manager
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
<PAGE> 42
OXFORD STRATEGIC INCOME FUND
By: Eaton Vance Management, as
Investment Advisor
By: /s/ Payson F. Swaffield
--------------------------------
Name: Payson F. Swaffield
--------------------------------
Title: Vice President
--------------------------------
<PAGE> 43
SENIOR DEBT PORTFOLIO
By: Boston Management and Research,
as Investment Advisor
By: /s/ Payson F. Swaffield
--------------------------------
Name: Payson F. Swaffield
--------------------------------
Title: Vice President
--------------------------------
<PAGE> 44
J.H. WHITNEY MARKET VALUE FUND, L.P.
By: J.H. Whitney Value GP, Ltd.,
its General Partner
By: /s/ Daniel J. O'Brien
--------------------------------
Name: Daniel J. O'Brien
--------------------------------
Title:
--------------------------------
<PAGE> 45
J.H. WHITNEY MEZZANINE FUND, L.P.
By: Whitney GP, Ltd. - General Partner
-------------------------------
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
<PAGE> 46
BANK OF AMERICA, N.A.
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
<PAGE> 47
DEBT STRATEGIES FUND I, INC.
By: /s/ Joseph Matte
--------------------------------
Name: Joseph Matteo
--------------------------------
Title:
--------------------------------
<PAGE> 48
DEBT STRATEGIES FUND II, INC.
By: /s/ Joseph Matte
--------------------------------
Name: Joseph Matteo
--------------------------------
Title:
--------------------------------
<PAGE> 49
THE FUJI BANK, LIMITED, NEW YORK BRANCH
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
<PAGE> 50
VAN KAMPEN SENIOR INCOME TRUST
By: /s/ Darvin D. Pierce
--------------------------------
Name: Darvin D. Pierce
--------------------------------
Title: Vice President
--------------------------------
<PAGE> 51
PROSPECT INTERNATIONAL DEBT
STRATEGY FUND
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
<PAGE> 52
EATON VANCE SENIOR INCOME TRUST
By: /s/ Payson F. Swaffield
--------------------------------
Name: Payson F. Swaffield
--------------------------------
Title: Vice President
--------------------------------
<PAGE> 53
MERRILL LYNCH SENIOR FLOATING RATE FUNDII, INC.
By: /s/ Joseph Matteo
--------------------------------
Name: Joseph Matteo
--------------------------------
Title:
--------------------------------
<PAGE> 54
MORGAN STANLEY DEAN WITTER PRIME INCOME TRUST
By: /s/ Sheila Finnerty
--------------------------------
Name: Sheila Finnerty
--------------------------------
Title: Senior Vice President
--------------------------------
<PAGE> 55
SAWGRASS TRADING LLC
By: /s/ Kelly C. Walker
----------------------------
Name: Kelly C. Walker
----------------------------
Title: Vice President
----------------------------
<PAGE> 56
BANC OF AMERICA SECURITIES LLC
By:
------------------------
Name:
------------------------
Title:
------------------------
<PAGE> 57
FIRST DOMINION FUNDING III
By: /s/ Andrew H. Marshak
------------------------
Name: Andrew H. Marshak
------------------------
Title: Managing Director
------------------------
<PAGE> 1
EXHIBIT 12.1
SCHEDULE RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
TELESITE SERVICES, LLC
------------------------------------------
(PREDECESSOR) SPECTRASITE
------------------------------------------ ---------------------
Year ended January 1- April 25 -
December 31, 1996 May 12, 1997 December 31, 1997
----------------------- ---------------- ---------------------
(dollars in thousands)
<S> <C> <C> <C>
Income (loss) before income taxes $2,289 $ (503) $ (3,890)
Equity in net loss of an affiliate - - -
Interest expense 67 36 164
Interest portion of rental expense 36 19 77
-------------------- ---------------- ---------------------
Earnings $2,392 $ (448) $ (3,649)
==================== ================ =====================
Interest expense $67 $ 36 $ 164
Capitalized interest - - -
Interest portion of rental expense 36 19 77
-------------------- ---------------- ---------------------
Fixed Charges $ 103 $ 55 $ 241
==================== ================ =====================
Ratio of earnings to fixed charges 23.2x - -
==================== ================ =====================
Deficiency of earnings to fixed
charges - $503 $3,890
==================== ================ =====================
<CAPTION>
TELESITE
AND
SPECTRASITE
COMBINED SPECTRASITE SPECTRASITE
--------------------- ------------------- ------------------
Year ended Year ended Year ended
December 31, 1997 December 31,1998 December 31, 1999
--------------------- ------------------- ------------------
(dollars in thousands)
<S> <C> <C> <C>
Income (loss) before income taxes $(4,393) $ (9,079) $ (97,100)
Equity in net loss of an affiliate - - 1,340
Interest expense 200 8,170 67,513
Interest portion of rental expense 96 196 5,967
----------------------- ------------------- ------------------
Earnings $(4,097) $(713) $ (22,280)
======================= =================== ==================
Interest expense $ 200 $8,170 $67,513
Capitalized interest - 100 1,100
Interest portion of rental expense 96 196 5,967
----------------------- ------------------- ------------------
Fixed Charges $ 296 $8,466 $74,580
======================= =================== ==================
Ratio of earnings to fixed charges - - -
======================= =================== ==================
Deficiency of earnings to fixed
charges $ 4,393 $9,179 $96,860
======================= =================== ==================
</TABLE>
Page 1
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF THE REGISTRANT
1. SpectraSite Communications, Inc. ("SCI"), a Delaware corporation and wholly
owned subsidiary of the Registrant.
2. SpectraSite International, Inc. ("International"), a Delaware corporation
and wholly owned subsidiary of the Registrant.
3. SpectraSite Communications Ltd. ("SCL"), a U.K. corporation and wholly
owned subsidiary of SCI.
4. Ample Design, Ltd., a U.K. corporation and wholly owned subsidiary of
International.
5. Telink Limited, a U.K. corporation and wholly owned subsidiary of
International.
6. SpectraSite Mexico Holdings, Inc., a Delaware corporation and wholly owned
subsidiary of SCI.
7. Tower Asset Sub, Inc., a Delaware corporation and wholly owned subsidiary
of SCI.
8. Stainless, Inc., a Pennsylvania corporation and wholly owned subsidiary of
SCI.
9. Doty-Moore Tower Services, Inc., a Texas corporation and wholly owned
subsidiary of SCI.
10. Doty-Moore Equipment, Inc., a Texas corporation and wholly owned subsidiary
of SCI.
11. Doty Moore RF Services, Inc., a Texas corporation and wholly owned
subsidiary of SCI.
12. SpectraSite Broadcast Technical Services, Inc., a Delaware corporation and
wholly owned subsidiary of SCI.
13. SpectraSite Broadcast Fabrication, Inc., a Delaware corporation and wholly
owned subsidiary of SCI.
14. SpectraSite Broadcast Towers, Inc., a Delaware corporation and wholly owned
subsidiary of SCI.
15. Vertical Properties, Inc., a New York corporation and wholly owned
subsidiary of SCI.
16. California Tower, Inc., a Delaware corporation and wholly owned subsidiary
of SCI.
<PAGE> 2
17. SpectraSite Wireless Towers, Inc., a Delaware corporation and wholly owned
subsidiary of SCI.
18. Apex Site Management Holdings, Inc. ("Apex Holdings"), a Delaware
corporation and wholly owned subsidiary of SCI.
19. Apex Site Management, Inc. ("Apex"), a Delaware corporation and wholly
owned subsidiary of Apex Holdings.
20. Metrosite Management, LLC, an Arkansas limited liability company and wholly
owned subsidiary of Apex.
21. Vertical Realty, LLC, a Delaware limited liability company and wholly owned
subsidiary of Apex.
22. Apex Site Management - Canada, Inc., a Delaware corporation and wholly
owned subsidiary of Apex.
23. Singlesource LLC, a Delaware limited liability company and wholly owned
subsidiary of Apex Holdings.
24. Westower Corporation ("Westower"), a Washington corporation and wholly
owned subsidiary of SCI.
25. SpectraSite Construction, Inc., a Delaware corporation and wholly owned
subsidiary of Westower.
26. CNG Communications, Inc., a Delaware corporation and wholly owned
subsidiary of Westower.
27. Westower Communications, Inc., a Texas Corporation and a wholly owned
subsidiary of Westower.
28. Teletronics Management Services, Inc., a Washington corporation and wholly
owned subsidiary of Westower.
29. Teletronics Realty Services, Inc., a Washington corporation and wholly
owned subsidiary of Westower.
30. Westower Design, Inc., a Florida corporation and wholly owned subsidiary of
Westower.
31. Westower Leasing, Inc., a Wyoming corporation and wholly owned subsidiary
of Westower.
32. Westower Communications Ltd., a Canadian Federal corporation.
<PAGE> 3
33. Westower Leasing Canada Inc., a Canadian Federal corporation and wholly
owned subsidiary of Westower.
34. Westower Acquisitions Canada, Inc. ("Acquisitions"), a Canadian Federal
corporation and wholly owned subsidiary of Westower.
35. Acier Filteau Inc., a Province Quebec corporation and wholly owned
subsidiary of Acquisitions.
36. Jovin Telecommunications, Inc., a Canadian Federal corporation and wholly
owned subsidiary of Acquisitions.
37. Telecommunication R. David Inc., a Province Quebec corporation and wholly
owned subsidiary of Acquisitions.
<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 February 14, 2000 in the Registration Statement (Form
S-4) of SpectraSite Holdings, Inc., for the offer to exchange its 10 3/4%
Senior Notes due 2010 and its 12 7/8% Senior Discount Notes due 2010, with
respect to the consolidated financial statements of SpectraSite Holdings, Inc.
as of December 31, 1999 and for the period from inception (April 25, 1997) to
December 31, 1997 and for the years ended December 31, 1998 and 1999 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
April 18, 2000
<PAGE> 1
EXHIBIT 23.3
Consent of PricewaterhouseCoopers LLP
We consent to the use in this Registration Statement on Form S-4 of SpectraSite
Holdings, Inc. of (i) our report dated February 4, 1999, except for the fourth
paragraph in Note 3, as to which the date is June 17, 1999, relating to the
consolidated financial statements of Westower Corporation and its subsidiaries
as of September 30, 1998 and for the seven months ended September 30, 1998 and
(ii) our report dated May 21, 1999 relating to the financial statements of
Summit Communications, LLC as of September 30, 1998 and for the nine months
ended September 30, 1998 which appear in such Registration Statement. We also
consent to the reference to us under the heading "Experts" in such Registration
Statement.
/s/ PricewaterhouseCoopers LLP
Seattle, Washington
April 17, 2000
<PAGE> 1
EXHIBIT 23.4
Consent of Moss Adams LLP
We consent to (a) the inclusion in the Registration Statement of
SpectraSite Holdings, Inc. on Form S-4 of (i) our report dated April 14, 1998,
except for the third paragraph in Note 3, as to which the date is May 31, 1998
and the fourth paragraph in Note 3, as to which the date is June 14, 1999,
relating to the consolidated financial statements of Westower Corporation and
Subsidiaries as of February 28, 1997 and 1998 and the three years in the period
ended February 28, 1998 and (ii) our report dated October 21, 1998 on our audit
of the financial statements of CORD Communications, Inc. as of June 30, 1997 and
1998 and for the years then ended and (b) the reference to our firm in the
prospectus under the caption "Experts".
/s/ Moss Adams LLP
Bellingham, Washington
April 18, 2000
<PAGE> 1
EXHIBIT 23.5
Consent of Lamn, Krielow, Dytrych & Co.
We consent to the inclusion in the Registration Statement of SpectraSite
Holdings, Inc., on Form S-4 (File No. 333- ) of our report dated
February 11, 1998, except for Note 4, as to which the date is August 12,
1998, relating to the financial statements of MJA Communications Corp. and to
the references to our firm in the prospectus.
/s/ LAMN, KRIELOW, DYTRYCH & CO.
(Formerly known as Lamn, Krielow, Dytrych & Darling)
Certified Public Accountants
April 14, 2000
<PAGE> 1
EXHIBIT 23.6
Consent of Shearer, Taylor & Co., P.A.
We consent to the inclusion in the Registration Statement of SpectraSite
Holdings, Inc. on Form S-4 of our report dated March 5, 1998, on the audit of
the financial statements of Summit Communications, LLC as of December 31, 1997
and the period from May 24, 1997 (inception) to December 31, 1997, and to the
reference to our firm in the prospectus under the caption "Experts."
/s/ Shearer, Taylor & Co., P.A.
April 17, 2000
<PAGE> 1
EXHIBIT 25.1
FORM T-1
==============================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) _______
------------------
UNITED STATES TRUST COMPANY OF NEW YORK (Exact name of trustee as
specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I.R.S. employer
if not a U.S. national bank) identification No.)
114 West 47th Street 10036-1532
New York, NY (Zip Code)
(Address of principal
executive offices)
------------------
Spectrasite Holdings, Inc.
(Exact name of obligor as specified in its charter)
Delaware 56-2027322
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
100 Regency Forest Drive, Suite 400
Cary, North Carolina 27511
(Address of principal executive offices) (Zip Code)
------------------
10 3/4% Senior Notes due 2010
(Title of the indenture securities)
==============================================
<PAGE> 2
- 2 -
GENERAL
1. General Information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b)Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with the Obligor
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
Spectrasite Holdings, Inc. currently is not in default under any of its
outstanding securities for which United States Trust Company of New York is
Trustee. Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12,
13, 14 and 15 of Form T-1 are not required under General Instruction B.
16. List of Exhibits
T-1.1 -- Organization Certificate, as amended, issued by
the State of New York Banking Department to transact
business as a Trust Company, is incorporated by
reference to Exhibit T-1.1 to Form T-1 filed on
September 15, 1995 with the Commission pursuant to
the Trust Indenture Act of 1939, as amended by the
Trust Indenture Reform Act of 1990 (Registration No.
33-97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
<PAGE> 3
- 3 -
16. List of Exhibits
(cont'd)
T-1.4 -- The By-Laws of United States Trust Company of New
York, as amended, is incorporated by reference to
Exhibit T-1.4 to Form T-1 filed on September 15, 1995
with the Commission pursuant to the Trust Indenture
Act of 1939, as amended by the Trust Indenture Reform
Act of 1990 (Registration No.
33-97056).
T-1.6 -- The consent of the trustee required by Section
321(b) of the Trust Indenture Act of 1939, as amended
by the Trust Indenture Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the
trustee pursuant to law or the requirements of its
supervising or examining authority.
NOTE
As of April 12, 2000, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States
Trust Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
------------------
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 12th day
of April, 2000.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By: /s/ MARGARET CIESMELEWSKI
-------------------------------
Margaret Ciesmelewski
Assistant Vice President
<PAGE> 4
Exhibit T-1.6
-------------
The consent of the trustee required by
Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
April 12, 2000
Securities and Exchange Commission 450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
/s/Gerard F. Ganey
---------------------
By: Gerard F. Ganey
Senior Vice President
<PAGE> 5
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
SEPTEMBER 30, 1999
($ IN THOUSANDS)
ASSETS
- ------
Cash and Due from Banks $ 193,236
Short-Term Investments 57,951
Securities, Available for Sale 489,135
Loans 2,423,223
Less: Allowance for Credit Losses 17,792
Net Loans 2,405,431
Premises and Equipment 56,406
Other Assets 123,784
Total Assets $3,325,943
LIABILITIES
- -----------
Deposits:
Non-Interest Bearing $ 779,713
Interest Bearing 1,973,842
----------
Total Deposits 2,753,555
Short-Term Credit Facilities 238,736
Accounts Payable and Accrued Liabilities 142,477
Total Liabilities $3,134,768
STOCKHOLDER'S EQUITY
- --------------------
Common Stock 14,995
Capital Surplus 53,041
Retained Earnings 124,916
Unrealized Loss on Securities
Available for Sale (Net of Taxes) (1,777)
----------------
Total Stockholder's Equity 191,175
Total Liabilities and
Stockholder's Equity $3,325,943
I, Richard E. Brinkmann, Managing Director & Comptroller of the named bank do
hereby declare that this Statement of Condition has been prepared in conformance
with the instructions issued by the appropriate regulatory authority and is true
to the best of my knowledge and belief.
Richard E. Brinkmann, Managing Director & Controller
January 25, 2000
<PAGE> 1
EXHIBIT 25.2
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2)
------------------
UNITED STATES TRUST COMPANY OF NEW YORK (Exact name of
trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I.R.S. employer
if not a U.S. national bank) identification No.)
114 West 47th Street 10036-1532
New York, NY (Zip Code)
(Address of principal
executive offices)
------------------
Spectrasite Holdings, Inc.
(Exact name of obligor as specified in its charter)
Delaware 56-2027322
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
100 Regency Forest Drive, Suite 400
Cary, North Carolina 27511
(Address of principal executive offices) (Zip Code)
------------------
12 7/8% Senior Discount Notes due 2010
(Title of the indenture securities)
==============================================
<PAGE> 2
- 2 -
GENERAL
1. General Information
-------------------
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b)Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with the Obligor
-----------------------------
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
Spectrasite Holdings, Inc. currently is not in default under any of its
outstanding securities for which United States Trust Company of New York is
Trustee. Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12,
13, 14 and 15 of Form T-1 are not required under General Instruction B.
16. List of Exhibits
----------------
T-1.1 -- Organization Certificate, as amended, issued by
the State of New York Banking Department to transact
business as a Trust Company, is incorporated by
reference to Exhibit T-1.1 to Form T-1 filed on
September 15, 1995 with the Commission pursuant to
the Trust Indenture Act of 1939, as amended by the
Trust Indenture Reform Act of 1990 (Registration No.
33-97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
<PAGE> 3
- 3 -
16. List of Exhibits
(cont'd)
T-1.4 -- The By-Laws of United States Trust Company of New
York, as amended, is incorporated by reference to
Exhibit T-1.4 to Form T-1 filed on September 15, 1995
with the Commission pursuant to the Trust Indenture
Act of 1939, as amended by the Trust Indenture Reform
Act of 1990 (Registration No.
33-97056).
T-1.6 -- The consent of the trustee required by Section
321(b) of the Trust Indenture Act of 1939, as amended
by the Trust Indenture Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the
trustee pursuant to law or the requirements of its
supervising or examining authority.
NOTE
- ----
As of April 12, 2000, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States
Trust Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
------------------
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 12th day
of April, 2000.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By: /s/ MARGARET CIESMELEWSKI
---------------------------------
Margaret Ciesmelewski
Assistant Vice President
<PAGE> 4
Exhibit T-1.6
-------------
The consent of the trustee required by Section 321(b) of
the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
April 12, 2000
Securities and Exchange Commission 450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
/s/Gerard F. Ganey
---------------------------
By: Gerard F. Ganey
Senior Vice President
<PAGE> 5
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
SEPTEMBER 30, 1999
($ IN THOUSANDS)
ASSETS
Cash and Due from Banks $ 193,236
Short-Term Investments 57,951
Securities, Available for Sale 489,135
Loans 2,423,223
Less: Allowance for Credit Losses 17,792
Net Loans 2,405,431
Premises and Equipment 56,406
Other Assets 123,784
Total Assets $3,325,943
LIABILITIES
Deposits:
Non-Interest Bearing $ 779,713
Interest Bearing 1,973,842
----------
Total Deposits 2,753,555
Short-Term Credit Facilities 238,736
Accounts Payable and Accrued Liabilities 142,477
Total Liabilities $3,134,768
STOCKHOLDER'S EQUITY
Common Stock 14,995
Capital Surplus 53,041
Retained Earnings 124,916
Unrealized Loss on Securities
Available for Sale (Net of Taxes) (1,777)
----------------
Total Stockholder's Equity 191,175
Total Liabilities and
Stockholder's Equity $3,325,943
I, Richard E. Brinkmann, Managing Director & Comptroller of the named bank do
hereby declare that this Statement of Condition has been prepared in conformance
with the instructions issued by the appropriate regulatory authority and is true
to the best of my knowledge and belief.
Richard E. Brinkmann, Managing Director & Controller
January 25, 2000
<PAGE> 1
PURSUANT TO THE PROSPECTUS DATED , 2000, THE EXCHANGE OFFER
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 2000,
UNLESS EXTENDED (THE EXPIRATION DATE).
SPECTRASITE HOLDINGS, INC.
LETTER OF TRANSMITTAL
10 3/4% SENIOR NOTES DUE 2010
AND
12 7/8% SENIOR DISCOUNT NOTES DUE 2010
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 ,
2000 of SpectraSite Holdings, Inc. (the "Issuer") and the related letter of
transmittal, which together describe the Issuer's offer to exchange: (a) $1,000
principal amount of its Series B 10 3/4% senior notes due 2010, which have been
registered under the Securities Act of 1933, as amended, for each $1,000
principal amount of its outstanding 10 3/4% senior notes due 2010, of which
$200,000,000 principal amount is outstanding; and (b) $1,000 principal amount at
maturity of its Series B 12 7/8% senior discount notes due 2010, which have been
registered under the Securities Act, for each $1,000 principal amount at
maturity of its outstanding 12 7/8% senior discount notes due 2010, of which
$559,800,000 original principal amount at maturity is outstanding. The term
expiration date means 5:00 p.m., New York City time, on , 2000,
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 Issuer extends
the exchange offer. The term holder with respect to the exchange offer means any
person: (i) in whose name outstanding 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 outstanding notes are held of record by The
Depository Trust Company ("DTC") and who desires to deliver those outstanding
notes by book-entry transfer at DTC.
<PAGE> 2
This letter of transmittal is to be used by holders if: (i) certificates
representing outstanding notes are to be physically delivered to the exchange
agent herewith by holders; (ii) tender of outstanding 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 outstanding
notes (such participants, acting on behalf of holders, are referred to herein as
"Acting Holders"); or (iii) tender of outstanding 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 outstanding notes must
complete this letter of transmittal in its entirety.
[ ] CHECK HERE IF TENDERED OUTSTANDING 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 OUTSTANDING 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 OUTSTANDING NOTES
WHICH WERE ACQUIRED AS A RESULT OF MARKET MAKING ACTIVITIES FOR REGISTERED
NOTES HAVE SOLD ALL REGISTERED 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 REGISTERED 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 outstanding notes to which this letter of transmittal
relates. If the space provided below is inadequate, the certificate numbers and
principal amount or principal amount at maturity, as applicable, of outstanding
notes should be listed on a separate signed schedule affixed hereto.
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
BOX 1
DESCRIPTION OF 10 3/4% SENIOR NOTES DUE 2010
(OUTSTANDING CASH NOTES)
- ------------------------------------------------------------------------------------------------------------------------
AGGREGATE PRINCIPAL AMOUNT
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE PRINCIPAL AMOUNT TENDERED
(PLEASE FILL IN, IF BLANK) NUMBER(S)** REPRESENTED BY (MUST BE IN
CERTIFICATE(S) INTEGRAL MULTIPLES
OF $1,000)*
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
TOTAL
- ------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF 12 7/8% SENIOR DISCOUNT NOTES DUE 2010
(OUTSTANDING DISCOUNT 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 MULTIPLES
CERTIFICATE(S) OF $1,000)*
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
TOTAL
- ------------------------------------------------------------------------------------------------------------------------
* Need not be completed by holders who wish to tender with respect to all outstanding notes listed. See Instruction 4.
If the space provided above is inadequate, list the certificate numbers and principal amount or principal amount at
maturity, as applicable, 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 outstanding cash notes or outstanding
discount notes not tendered, or registered cash notes or registered discount
notes issued in exchange for outstanding cash notes or outstanding discount
notes, respectively, 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 outstanding cash notes or outstanding
discount notes not tendered, or registered cash notes or registered discount
notes issued in exchange for outstanding cash notes or outstanding discount
notes, respectively, 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 outstanding cash notes or
outstanding discount notes is a participating broker-dealer and such
participating broker-dealer acquired the outstanding cash notes or
outstanding discount notes, respectively, 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
or the principal amount at maturity, as the case may be, of outstanding notes
indicated above.
Subject to and effective upon the acceptance for exchange of the principal
amount or the principal amount at maturity, as the case may be, of outstanding
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 outstanding 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 outstanding notes
with the full power of substitution to (i) present such outstanding notes and
all evidences of transfer and authenticity to, or transfer ownership of, such
outstanding notes on the account books maintained by DTC to, or upon, the order
of, the Issuer, (ii) deliver certificates for such outstanding 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 outstanding notes for
transfer on the books of the Issuer and receive all benefits and otherwise
exercise all rights of beneficial ownership of such outstanding 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 outstanding
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
registered notes are to be acquired by the holder or the person receiving such
registered 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 registered notes, (iii) the
holder or any such other person has no arrangement or understanding with any
person to participate in the distribution of the registered 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 a registered note for its own
account in exchange for outstanding notes must acknowledge that it (i) acquired
the outstanding 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
registered notes to be received in the exchange offer and (iii) will deliver a
prospectus in connection with any resale of such registered 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 registered notes.
For purposes of the exchange offer, the Issuer shall be deemed to have
accepted validly tendered outstanding notes when, as and if the Issuer has given
oral or written notice thereof to the exchange agent.
If any outstanding notes tendered herewith are not accepted for exchange
pursuant to the exchange offer for any reason, certificates for any such
unaccepted outstanding 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 outstanding 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 registered notes
issued in exchange for the outstanding notes accepted for exchange and any
certificates for outstanding notes not tendered or not exchanged, in the name(s)
of the registered holder of the outstanding notes appearing in Box 1 above (or
in such event in the case of outstanding 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
registered notes issued in exchange for the outstanding notes accepted for
exchange and any certificates for outstanding 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 registered notes
issued in exchange for the outstanding notes accepted for exchange in the
name(s) of, and return any certificates for outstanding 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 outstanding notes from the
name of the registered holder(s) thereof if the Issuer does not accept for
exchange any of the outstanding notes so tendered.
Holders who wish to tender their outstanding notes and (i) whose
outstanding notes are not immediately available or (ii) who cannot deliver the
outstanding notes, this letter of transmittal or any other documents required
hereby to the exchange agent prior to the expiration date, may tender their
outstanding 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 outstanding 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 outstanding 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 outstanding 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 OUTSTANDING
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: , 2000
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 Outstanding
Notes or Book-Entry Confirmations. Certificates representing the tendered
outstanding notes (or a confirmation of book-entry transfer of such outstanding
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 outstanding 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
outstanding notes prior to the completion of the exchange offer.
2. Guaranteed Delivery Procedures. Holders who wish to tender their
outstanding notes but whose outstanding notes are not immediately available and
who cannot deliver their certificates for outstanding 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 outstanding 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 outstanding notes, and the principal amount of tendered
outstanding cash notes or the principal amount at maturity of tendered
outstanding discount notes, as applicable, 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 outstanding
notes (or a confirmation of book-entry transfer of such outstanding
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 outstanding
notes in proper form for transfer (or a confirmation of book-entry
transfer of such outstanding 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 outstanding notes
may tender such outstanding notes in the exchange offer. Any beneficial owner of
outstanding 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
8
<PAGE> 9
outstanding notes, either make appropriate arrangements to register ownership of
the outstanding notes in such owner's name or obtain a properly completed bond
power from the registered holder.
4. Partial Tenders. Tenders of outstanding cash notes will be accepted
only in integral multiples of $1,000 principal amount and tenders of outstanding
discount notes will be accepted only in integral multiples of $1,000 principal
amount at maturity. If less than the entire principal amount of outstanding cash
notes or principal amount at maturity of outstanding discount notes is tendered,
the tendering holder should fill in the principal amount tendered in the column
labeled "Principal Amount Tendered," or the principal amount at maturity
tendered in the column labeled "Principal Amount at Maturity Tendered,"
respectively, of the box entitled "Description of Outstanding Notes" (Box 1)
above. The entire principal amount of outstanding cash notes or principal amount
at maturity of outstanding discount notes, respectively, delivered to the
exchange agent will be deemed to have been tendered unless otherwise indicated.
If the entire principal amount of outstanding cash notes or principal amount at
maturity of outstanding discount notes is not tendered, outstanding cash notes
for the principal amount of outstanding cash notes not tendered and registered
cash notes exchanged for any outstanding cash notes tendered, and outstanding
discount notes for the principal amount at maturity of outstanding discount
notes not tendered and registered discount notes exchanged for any outstanding
discount 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 outstanding notes tendered herewith, the
signatures must correspond with the name(s) as written on the face of the
tendered outstanding notes without alteration, enlargement, or any change
whatsoever.
If any of the tendered outstanding notes are owned of record by two or more
joint owners, all such owners must sign this letter of transmittal. If any
tendered outstanding notes are held in different names on several outstanding
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 outstanding notes are held.
If this letter of transmittal is signed by the registered holder, and
registered notes are to be issued and any untendered or unaccepted principal
amount at maturity of outstanding notes are to be reissued or returned to the
registered holder, then the registered holder need not and should not endorse
any tendered outstanding notes nor provide a separate bond power. In any other
case, the registered holder must either properly endorse the outstanding 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 outstanding 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 outstanding 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 outstanding notes
tendered herewith and the issuance of registered notes (and any outstanding
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
registered notes and/or substitute outstanding 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,
9
<PAGE> 10
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 registered notes (and any
outstanding notes not tendered or not accepted) will be issued in the name of
and sent to the registered holder of the outstanding notes.
7. Transfer Taxes. The Issuer will pay all transfer taxes, if any,
applicable to the sale and transfer of outstanding 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 outstanding notes to the Issuer
or its order pursuant to the exchange 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 outstanding 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 registered 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 that the
holder is subject to backup withholding as a result of failure to report all
interest or dividends or (ii) the Internal Revenue Service 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 registered notes or a broker or custodian) may still withhold 31%
of the amount of any payments made on account of the registered notes until the
holder furnishes the Issuer or the exchange agent with respect to the registered
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 Internal
Revenue Service. 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, Internal
Revenue Service 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
outstanding notes to be deemed invalidly tendered, but may require the Issuer or
the exchange agent with respect to the registered notes, broker or custodian to
withhold 31% of the amount of any payments made on account of the registered
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 Internal Revenue Service.
9. Validity of Tenders. All questions as to the validity, form,
eligibility (including time of receipt), and acceptance of tendered outstanding
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 outstanding notes not validly tendered or any outstanding 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 outstanding 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 outstanding notes must be
10
<PAGE> 11
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 outstanding 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 outstanding notes.
11. No Conditional Tender. No alternative, conditional, irregular, or
contingent tender of outstanding notes will be accepted.
12. Mutilated, Lost, Stolen, or Destroyed Outstanding Notes. Any tendering
holder whose outstanding 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 Outstanding Notes and Issuance of Registered
Notes; Return of Outstanding Notes. Subject to the terms and conditions of the
exchange offer, the Issuer will accept for exchange all validly tendered
outstanding notes as soon as practicable after the expiration date and will
issue registered notes therefor as soon as practicable thereafter. For purposes
of the exchange offer, the Issuer shall be deemed to have accepted tendered
outstanding notes when, as and if the Issuer has given written and oral notice
thereof to the exchange agent. If any tendered outstanding notes are not
exchanged pursuant to the exchange offer for any reason, such unexchanged
outstanding 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>
CERTIFICATE OUTSTANDING NOTES OUTSTANDING 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
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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
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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. [ ]
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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:
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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.
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Signature: Date:
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12
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
10 3/4% SENIOR NOTES DUE 2010
AND
12 7/8% SENIOR DISCOUNT NOTES DUE 2010
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 , 2000 if holders of certificates for the 10 3/4%
senior notes due 2010 and the 12 7/8% senior discount notes due 2010 who wish to
tender their outstanding notes but whose outstanding notes are not immediately
available and who cannot deliver their certificates for outstanding 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.
TO: UNITED STATES TRUST COMPANY OF NEW YORK, THE EXCHANGE AGENT
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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
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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 outstanding 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 outstanding notes) outstanding 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.
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Certificate No(s). for Outstanding Notes (if Name(s) of Record Holder(s)
available)
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PLEASE PRINT OR TYPE
Address
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Telephone. No. ( )
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Signature(s)
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Dated:
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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 outstanding notes tendered hereby and (b)
guarantees that delivery to the exchange agent of certificates for the
outstanding 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
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Authorized Signature
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Name
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PLEASE PRINT OR TYPE
Title
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Address
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Zip Code
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Telephone. No. ( )
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Dated: , 2000
NOTE: DO NOT SEND OUTSTANDING NOTES WITH THIS FORM; OUTSTANDING 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.
