<PAGE>
As filed with the Securities and Exchange Commission on August 5, 1999
Securities Act File No. 333-83965
Investment Company Act File No. 811-09501
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-2
[_]Registration Statement Under The Securities Act of 1933
[X]Pre-Effective Amendment No. 1
[_]Post-Effective Amendment No.
[_]Post-Effective Amendment No.
[_]Registration Statement Under The Investment Company Act of 1940
[X]Amendment No. 1
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DECS TRUST V
(Exact Name of Registrant as Specified in Charter)
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (212) 816-6000
Alan M. Rifkin
Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
(Name and Address of Agent for Service)
With copies to:
Raymond B. Check, Esq.
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006-1470
(212) 225-2000
Approximate Date of Proposed Public Offering: As soon as practicable after
the effective date of this Registration Statement.
If any securities being registered on this form will be offered on a delayed
or continuous basis in reliance on Rule 415 under the Securities Act of 1933,
as amended, other than securities offered in connection with a dividend
reinvestment plan, check the following box. [_]
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
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<TABLE>
<S> <C> <C> <C> <C>
Proposed Proposed Maximum
Maximum Aggregate Amount of
Title of Securities Amount being Offering Price Offering Registration Fee
Being Registered Registered(1) per DECS(2) Price(2) (3)(4)
- ------------------------------------------------------------------------------------------------
DECS representing shares
of beneficial
interest.............. 5,645,000 $ $129,835,000 $36,094
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</TABLE>
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(1) Includes a total of 645,000 DECS that may be issued in connection with the
exercise of an over-allotment option.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) Computed pursuant to Rule 457(o) based upon the maximum aggregate offering
price of the DECS.
(4) This fee was paid in connection with the initial filing of this
registration.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
DECS TRUST V
Cross-Reference Sheet
Parts A and B of Prospectus*
<TABLE>
<CAPTION>
temINo. Caption Prospectus Caption
- -------- ------- ------------------
<S> <C> <C>
1. Outside Front Cover........................ Front Cover Page
2. Inside Front and Outside Back Cover Page... Front Cover Page; Inside Front
Cover Page
3. Fee Table and Synopsis..................... Prospectus Summary; Fees and Expenses
4. Financial Highlights....................... Not Applicable
5. Plan of Distribution....................... Front Cover Page; Prospectus Summary;
Underwriting
6. Sellers.................................... Not Applicable
7. Use of Proceeds............................ Use of Proceeds; Investment
Objectives and Policies
8. General Description of the Registrant...... Front Cover Page; Prospectus
Summary; The Trust; Investment
Restrictions; Investment Objectives
and Policies; Risk Factors for DECS
9. Management................................. Management and Administration of the
Trust
10. Capital Stock, Long-Term Debt and Other
Securities; Federal Income Tax
Considerations............................. Description of DECS
11. Defaults and Arrears on Senior Securities.. Not Applicable
12. Legal Proceedings.......................... Not Applicable
13. Table of Contents of the Statement of
Additional Information..................... Not Applicable
14. Cover Page................................. Not Applicable
15. Table of Contents.......................... Not Applicable
16. General Information and History............ The Trust
17. Investment Objective and Policies.......... Investment Objectives and Policies;
Investment Restrictions
18. Management................................. Management and Administration of the
Trust
19. Control Persons and Principal Holders of Management and Administration of the
Securities................................. Trust
20. Investment Advisory and Other Services..... Management and Administration of the
Trust
21. Brokerage Allocation and Other Practices... Investment Objectives and Policies
22. Tax Status................................. Certain United States Federal Income
Tax Considerations
23. Financial Statements....................... Statement of Assets and Liabilities
</TABLE>
- --------
* Pursuant to the General Instructions to Form N-2, all information required
to be set forth in Part B: Statement of Additional Information has been
included in Part A: The Prospectus. Information required to be included in
Part C is set forth under the appropriate item, so numbered, in Part C of
the N-2 Registration Statement.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities, and we are not soliciting an offer to buy +
+these securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED AUGUST 5, 1999
PROSPECTUS
5,000,000 DECS/SM/
DECS Trust V
(Subject to Exchange into Common Stock of Crown Castle International Corp.)
--------
DECS Trust V is a recently created Delaware business trust. The DECS are
securities that represent all of the beneficial interest in the trust. When the
trust issues the DECS, it will acquire U.S. Treasury securities and four
prepaid forward contracts for the purchase of Crown Castle common stock.
For each DECS that you buy, you will receive a cash distribution of $ on
each , , and starting on , 1999 and ending on , 2002.
Those payments will be made from the U.S. Treasury securities that the trust
acquires when it issues the DECS.
The trust will hold four prepaid forward contracts, each of which will
entitle the trust to receive Crown Castle common stock or cash from one of four
stockholders of Crown Castle. We refer to those four stockholders as the
sellers. On or shortly after , 2002, each seller will deliver, at its
option, either cash or Crown Castle common stock to the trust. The trust will
then deliver this cash or Crown Castle common stock to you. Under the
circumstances described in this prospectus, each seller will have the option to
deliver cash to the trust between , 2002 and , 2002. After the trust
has delivered to you the cash or Crown Castle common stock delivered to the
trust by all of the sellers, the trust will terminate. The amount of cash or
number of shares of Crown Castle common stock each seller will deliver and you
will receive will depend on the price of Crown Castle common stock shortly
before the date the seller delivers the cash or Crown Castle common stock to
the trust. If the price of Crown Castle common stock is:
. more than $ per share, you will receive 0. shares of Crown Castle common
stock, or the cash equivalent, for each DECS you own
. more than $ per share but less than or equal to $ per share, you will
receive Crown Castle common stock worth $ , or the cash equivalent, for
each DECS you own
. $ per share or less, you will receive one share of Crown Castle common
stock, or the cash equivalent, for each DECS you own
The last reported sale price of Crown Castle common stock on August 4, 1999
was $22.00 per share.
The trust's securities have no history of public trading. Typical closed-end
fund shares frequently trade at a discount from net asset value. This
characteristic of investments in a closed-end investment company is a risk
separate and distinct from the risk that the trust's net asset value will
decrease. The trust cannot predict whether the DECS will trade at, below or
above net asset value. The risk of purchasing investments in a closed-end
company that might trade at a discount is more pronounced for investors who
wish to sell their investments soon after completion of a public offering.
--------
Investing in the DECS involves certain risks. See "Risk Factors for DECS"
beginning on page 22.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
--------
<TABLE>
<CAPTION>
Per DECS Total
-------- -----
<S> <C> <C>
Public Offering Price $ $
Sales Load $ $
Proceeds to the trust before expenses $ $
</TABLE>
The underwriters are offering the DECS subject to various conditions. The
underwriters expect to deliver the DECS to purchasers on , 1999.
--------
Salomon Smith Barney
Goldman, Sachs & Co.
, 1999
<PAGE>
You should rely only on the information contained in or incorporated by
reference in this prospectus. The trust has not authorized anyone to provide
you with different information. The trust is not making an offer of these
securities in any state where the offer is not permitted. You should not assume
that the information contained in or incorporated by reference in this
prospectus is accurate as of any date other than the date on the front of this
prospectus.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary......................................................... 3
Fees and Expenses.......................................................... 8
The Trust.................................................................. 9
Use of Proceeds............................................................ 9
Investment Objectives and Policies......................................... 9
Investment Restrictions.................................................... 22
Risk Factors For DECS...................................................... 22
Net Asset Value............................................................ 26
Description of the DECS.................................................... 27
Management and Administration of the Trust................................. 29
Certain United States Federal Income Tax Considerations.................... 32
Underwriting............................................................... 37
Legal Matters.............................................................. 39
Experts.................................................................... 39
Where You Can Find More Information........................................ 39
Report of Independent Accountants.......................................... 40
Statement of Assets, Liabilities and Capital............................... 41
</TABLE>
Until , 1999, all dealers that effect transactions in these
securities, whether or not participating in this securities offering, may be
required to deliver a prospectus. This is in addition to the dealers'
obligation to deliver a prospectus when acting as underwriters and with respect
to their unsold allotments or subscription.
---------------
"DECS" is a service mark of Salomon Smith Barney Inc.
<PAGE>
PROSPECTUS SUMMARY
This summary highlights certain information contained elsewhere in this
prospectus. This summary is not complete and does not contain all of the
information that you should consider before investing in the DECS. You should
read the entire prospectus carefully, especially the risks of investing in the
DECS discussed under "Risk Factors for DECS."
The Trust
DECS Trust V is a recently created Delaware business trust. The trust will
terminate on or shortly after , 2002, which is referred to in this summary
as the "exchange date" because that is when the Crown Castle common stock or
their value in cash are expected to be delivered under all of the prepaid
forward contracts the trust has with the sellers. In some limited
circumstances, the Crown Castle common stock or its value in cash may be
delivered and the trust terminated sooner than that date. In other limited
circumstances, one or more sellers who elect to deliver cash may extend the
exchange date, for purposes of their respective contracts only, to , 2002,
and may subsequently accelerate the extended exchange date if they wish. If the
exchange date under any of the sellers' contracts is extended in this way, the
trust will terminate on or shortly after the date all of the Crown Castle
common stock or cash has been delivered under all of the prepaid forward
contracts.
The DECS
The DECS are securities that represent all of the beneficial interest in the
trust. The underwriters named in this prospectus are offering the DECS for sale
at a price of $ per DECS, which is the same as the closing bid price of a
share of Crown Castle common stock on the Nasdaq National Market on , 1999.
The underwriters also may purchase up to 645,000 additional DECS from the trust
to cover over-allotments.
Purpose of the Trust
The trust was created to issue the DECS and to carry out the transactions
described in this prospectus. The terms of the DECS are designed to give you a
higher yield than the current dividend yield on Crown Castle common stock,
while also giving you the chance to share in the increased value of Crown
Castle common stock if its price goes up. Crown Castle does not currently pay
dividends on its common stock and has stated that it does not intend to do so,
but in the future Crown Castle might pay dividends that are higher than the
distributions that you will receive from the trust. Also, you will receive less
than you paid for your DECS if the price of Crown Castle common stock goes
down, but you will receive only part of the increased value if the price goes
up, and then only if the price is above $ per share shortly before the
exchange date.
Quarterly Distributions
For each DECS that you buy, you will receive a cash distribution of $ on
each , , and , starting on , 1999 and ending on , 2002.
Those payments will be made from the U.S. Treasury securities that the trust
acquires when it issues the DECS.
Distributions on the Exchange Date
On the exchange date, you will receive between 0. and 1.0 shares of Crown
Castle common stock for each DECS you own. Those amounts will be adjusted if
Crown Castle splits its stock, pays a stock dividend, issues warrants or
distributes certain types of assets or if certain other events occur that are
described in detail
3
<PAGE>
later in this prospectus. Under its prepaid forward contract with the trust,
each seller has the option to deliver cash to the trust instead of shares of
Crown Castle common stock. If a seller decides to deliver cash, you will
receive the cash value of the Crown Castle common stock you would have received
under that seller's contract instead of the shares themselves. If Crown Castle
merges into another company or liquidates, you may receive shares of the other
company or cash instead of Crown Castle common stock on the exchange date. And
if a seller defaults under its prepaid forward contract with the trust, the
obligations of that seller under its contract will be accelerated, and the
trust will immediately distribute to you the Crown Castle common stock or cash
received by the trust under the relevant prepaid forward contract, plus a
proportionate amount of the U.S. Treasury securities then held by the trust.
In addition, each seller may elect to deliver cash instead of Crown Castle
common stock by completing an offering of securities to refinance the DECS. We
refer to such an offering as a rollover offering. Each seller may extend the
exchange date under its prepaid forward contract to , 2002, but only in
connection with a rollover offering. If any seller completes a rollover
offering and has extended the exchange date, that seller will deliver the cash
due under its prepaid forward contract by the fifth business day after the
extended exchange date. Any sellers that have elected to extend the exchange
date to , 2002 will also have the option of later accelerating the exchange
date to between , 2002 and , 2002, in which case such sellers will
deliver the cash due under their prepaid forward contracts by the fifth
business day after the accelerated exchange date.
In addition, any seller that has extended the exchange date will deliver
cash to be distributed as an additional partial distribution for the period
beginning on , 2002 and ending on the date the seller delivers the cash
value of the Crown Castle common stock under its prepaid forward contract.
Voting Rights
You will not have the right to vote any Crown Castle common stock unless and
until it is delivered to the trust by the sellers and distributed to you by the
trust. You will have the right to vote on matters that affect the trust.
Assets of the Trust; Investment Objectives and Policies
The trust will own the following assets:
. zero-coupon U.S. Treasury securities that will mature every quarter
during the term of the trust, and which will provide cash to pay the
quarterly distributions on the DECS
. a prepaid forward contract with each of the sellers under which each
relevant seller has the right to deliver Crown Castle common stock or
cash to the trust on the exchange date, which the trust will then
distribute to you
The U.S. Treasury securities initially will represent approximately % of the
trust's assets and the prepaid forward contracts initially will represent
approximately %.
The trust's investment objective is to provide you with (1) a quarterly
distribution of $ per DECS over the term of the trust and (2) Crown Castle
common stock on the exchange date in an amount equal to:
. 0. shares of Crown Castle common stock per DECS if the average price
of Crown Castle common stock shortly before the exchange date is more
than $
4
<PAGE>
. shares of Crown Castle common stock worth $ per DECS (the issue price
of the DECS) if the average price of Crown Castle common stock shortly
before the exchange date is more than $ per share but less than or
equal to $ per share
. one share of Crown Castle common stock per DECS if the average price of
Crown Castle common stock shortly before the exchange date is $ or
less per share
The trust will not deliver fractions of a share of Crown Castle common stock.
If you would receive a fraction of a share of Crown Castle common stock under
this formula (based on all DECS owned), you will receive cash instead.
At the closing of the sale of the DECS, the trust will enter into prepaid
forward contracts with each of the sellers. The prepaid forward contracts will
require the sellers to deliver to the trust up to a total of shares of
Crown Castle common stock on the exchange date for all of the contracts
together. The purchase price for the Crown Castle common stock under each
prepaid forward contract will be $ per share or $ in total for all of the
contracts together. The trust will pay the sellers the purchase price for the
Crown Castle common stock on the date the DECS are issued.
Each seller will secure its obligations to deliver Crown Castle common stock
to the trust on the exchange date by pledging the stock to the trust on the
date the DECS are issued. During the term of the DECS, two of the sellers will
have the right to substitute U.S. Treasury securities as collateral for their
pledged Crown Castle common stock.
Any seller electing to extend the exchange date under its contract to ,
2002 will secure its obligation to pay interest accruing during the period
beginning on , 2002 and ending on the extended (or accelerated) exchange
date by pledging U.S. Treasury securities to the trust.
Certain U.S. Federal Income Tax Consequences
For U.S. federal income tax purposes, the trust and owners of DECS agree to
treat the owners of DECS as owning all of the beneficial interests in the U.S.
Treasury securities and the prepaid forward contracts held by the trust. In
addition, the sellers, the trust and owners of DECS agree to treat a portion of
the amount invested by you as a cash deposit that will be used to satisfy your
obligation to make payment under the prepaid forward contracts for the purchase
of Crown Castle common stock on the exchange date. Under this treatment, if you
are a U.S. individual or taxable entity, you generally will be required to pay
taxes on only a relatively small portion of each quarterly cash distribution
you receive from the trust, which will be ordinary income. If you hold the DECS
until they mature, you will not be subject to tax on the receipt of Crown
Castle common stock. If you sell your DECS or receive cash on the exchange
date, you will have a capital gain or loss equal to the difference between your
tax basis in the DECS and the cash you receive. In addition, it is possible
that you will have a capital gain on a deemed exchange of a portion of your
DECS during the term of the DECS. You should refer to the section "Certain
United States Federal Income Tax Considerations" in this prospectus for more
information.
Crown Castle
Crown Castle is a leading owner and operator of towers and transmission
networks for wireless communications and broadcast companies.
A prospectus and a prospectus supplement that describe Crown Castle and the
Crown Castle common stock that you may receive are attached to this prospectus.
Crown Castle is not affiliated with the trust, will not receive any of the
proceeds from the sale of the DECS by the trust and will not have any
obligation under the
5
<PAGE>
DECS or the prepaid forward contracts between the trust and the sellers. The
sellers did not prepare, and are not responsible for, the Crown Castle
prospectus or prospectus supplement. The Crown Castle prospectus and prospectus
supplement are attached to this prospectus only for your convenience. The Crown
Castle prospectus and prospectus supplement are not part of this prospectus and
are not incorporated by reference into this prospectus.
Management and Administration of the Trust
The internal operations of the trust will be managed by three trustees; the
trust will not have an investment advisor. The Bank of New York (or its
successor) will act as trust administrator to carry out the day-to-day
administration of the trust, and will also be the custodian for the trust's
assets, its paying agent, registrar and transfer agent for the DECS and the
collateral agent for the sellers' pledges of Crown Castle common stock to the
trust. The Bank of New York will not have any other affiliation with the trust.
Term of the Trust
The trust will terminate automatically on or shortly after the date on which
the trust distributes to you the Crown Castle common stock or cash that the
trust receives on the exchange date under its prepaid forward contracts with
the sellers. Under most circumstances, this will be on or shortly after ,
2002 or , 2002 if any seller has elected to extend the exchange date under
its contract.
Risk Factors
. The trust will not dispose of its prepaid forward contracts for Crown
Castle common stock during the term of the trust even if the value of
Crown Castle common stock declines or Crown Castle's financial condition
changes for the worse.
. During the term of the trust, Crown Castle could start paying dividends
that would provide investors in its stock with a higher yield than you
will receive on the DECS.
. You will bear the entire risk of declines in the value of Crown Castle
common stock between the closing date and the exchange date. The amount
of Crown Castle common stock or cash that you will receive on the
exchange date is not fixed, but is based on the market price of Crown
Castle common stock shortly before the exchange date. If the market
price of Crown Castle common stock declines, the stock or cash that you
receive will be less than what you paid for your DECS and you will lose
money. If Crown Castle becomes bankrupt or insolvent, you could lose
everything you paid for your DECS.
. You will have less opportunity for gains if the value of Crown Castle
common stock increases than you would have if you purchased Crown Castle
common stock directly. You will realize a gain only if the value of
Crown Castle common stock increases by approximately % between the
closing date and the exchange date, and then you will only receive % of
the increase in the Crown Castle common stock price above that level.
Because the trust will determine the value of the Crown Castle common
stock based on its average price for 20 trading days before the exchange
date, the actual value of the stock or cash that you receive on the
exchange date may be more or less than the price of the stock on the
exchange date.
. Because the trust will own only U.S. Treasury securities and the prepaid
forward contracts, an investment in the DECS may be riskier than an
investment in an investment company with more diversified assets.
6
<PAGE>
. The trading price of Crown Castle common stock will directly affect the
trading price of the DECS in the secondary market. The trading price of
Crown Castle common stock will be influenced by Crown Castle's operating
results and prospects, by economic, financial and other factors and by
general market conditions.
. You will not have any right to vote the Crown Castle common stock
underlying the DECS, to receive dividends on that stock (if any are
declared) or to act as an owner of the stock in any other way unless and
until the sellers deliver the stock to the trust under their prepaid
forward contracts and the trust distributes the stock to you.
. A bankruptcy of any of the sellers could interfere with the timing of
the delivery of shares or cash under the DECS and therefore could affect
the amount you receive.
Listing
The trust has applied to have the DECS approved for listing on the Nasdaq
National Market under the symbol " TWDE." Crown Castle common stock is traded
on the Nasdaq National Market under the symbol "TWRS." The last reported sale
price of Crown Castle common stock on August 14, 1999 was $22.00 per share.
7
<PAGE>
FEES AND EXPENSES
Because the trust will use proceeds from the sale of the DECS to purchase
the forward contracts from the sellers, the sellers have agreed in the
underwriting agreement to pay to the underwriters as compensation $ per DECS.
See "Underwriting." Salomon Smith Barney Inc. ("Salomon Smith Barney") will pay
estimated organization costs of the trust in the aggregate amount of $ and
estimated costs of the trust in connection with the initial registration and
public offering of the DECS in the aggregate amount of $ at the closing of
this offering. In addition, Salomon Smith Barney will pay the Administrator,
the Custodian, the Paying Agent and each Trustee at the closing of this
offering a one-time, up-front amount in respect of its ongoing fees and, in the
case of the Administrator, anticipated expenses of the trust (estimated to be
$ in the aggregate) over the term of the trust. Salomon Smith Barney has
agreed to pay any on-going expenses of the trust in excess of these estimated
amounts and to reimburse the trust for any amounts it may be required to pay as
indemnification to any Trustee, the Administrator, the Custodian or the Paying
Agent. The sellers will reimburse Salomon Smith Barney for certain expenses of
the trust and reimbursements of indemnifications paid by it. See "Management
and Administration of the Trust--Estimated Expenses."
Regulations of the Securities and Exchange Commission require the
presentation of trust expenses in the following format in order to assist
investors in understanding the costs and expenses that an investor will bear
directly or indirectly. Because the trust will not bear any ongoing fees or
expenses, investors will not bear any direct expenses. The only expenses that
an investor might be considered to bear indirectly are (a) the underwriters'
compensation payable by the sellers with respect to such investor's DECS and
(b) the ongoing expenses of the trust (including fees of the Administrator,
Custodian, Paying Agent and Trustees), estimated at $ per year in the
aggregate, which Salomon Smith Barney will pay at the closing of the offering.
<TABLE>
<S> <C>
Investor transaction expenses
Sales Load (as a percentage of offering price)............................ %
===
Annual Expenses
Management Fees........................................................... 0%
Other Expenses (after reimbursement by the sellers)*...................... 0%
Total Annual Expenses*.................................................. 0%
===
</TABLE>
- --------
* Without this reimbursement, the trust's "total annual expenses" would be
equal to approximately % of the trust's average net assets.
SEC regulations also require that closed-end investment companies present an
illustration of cumulative expenses (both direct and indirect) that an investor
would bear. The regulations require the illustration to factor in the
applicable sales load and to assume, in addition to a 5% annual return, the
reinvestment of all distributions at net asset value. Investors should note
that the assumption of a 5% annual return does not accurately reflect the
financial terms of the trust. See "Investment Objectives and Policies--Trust
Assets." Additionally, the trust does not permit the reinvestment of
distributions.
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
You would pay the following expenses (i.e., the applicable
sales load and allocable portion of ongoing expenses paid by
Salomon Smith Barney and the sellers) on a $1,000 investment,
assuming a 5% annual return ................................. $ $
</TABLE>
8
<PAGE>
THE TRUST
DECS Trust V is a newly organized Delaware business trust that is registered
as a closed-end management investment company under the Investment Company Act.
The trust was formed on April 22, 1999, pursuant to a Declaration of Trust,
dated as of April 22, 1999 (the "Declaration of Trust"). The term of the trust
will expire on or shortly after , 2002, except that the trust may be
dissolved prior to such date under certain limited circumstances. The address
of the trust is c/o Salomon Smith Barney Inc., 388 Greenwich Street, New York,
New York 10013 (telephone number: (212) 816-6000).
USE OF PROCEEDS
On or shortly after the date on which it sells the DECS, the trust will use
the proceeds of this offering to purchase a fixed portfolio comprised of a
series of zero-coupon U.S. Treasury securities (the "Treasury Securities")
maturing quarterly during the term of the trust and to pay the purchase price
under each prepaid forward contract (the "prepaid forward contract") to the
relevant seller.
INVESTMENT OBJECTIVES AND POLICIES
Trust Assets
The trust's investment objectives are to provide investors with a quarterly
distribution of $ per DECS on each distribution date during the term of the
trust (representing the pro rata portion of the quarterly distributions in
respect of the maturing Treasury Securities held by the trust) and to provide
investors, on , 2002 or such later date not later than , 2002 as may be
elected by one or more sellers making a Rollover Offering as described below
(in each case, the "Exchange Date" under the applicable prepaid forward
contract or contracts), a number of shares of Crown Castle common stock (the
"Common Stock") at the Exchange Rate (as defined below) or, to the extent that
one or more sellers elects the Cash Delivery Option (as defined below), an
amount in cash equal to the Exchange Price (as defined below) thereof. On or
prior to the 25th Business Day prior to the Exchange Date, each seller will
notify the trust concerning its exercise of the Cash Delivery Option, and the
trust in turn will notify The Depository Trust Company and publish a notice in
a daily newspaper of national circulation stating whether investors will
receive shares of Common Stock, cash or both. See "--The Forward Contracts--
General" below. "Business Day" means any day that is not a Saturday, a Sunday
or a day on which the New York Stock Exchange (the "NYSE") or banking
institutions or trust companies in The City of New York are authorized or
obligated by law or executive order to close.
The "Exchange Rate" is equal to, subject to certain adjustments,
(a) if the Exchange Price (as defined below) is greater than $ (the
"Threshold Appreciation Price"), shares of Common Stock per DECS;
(b) if the Exchange Price is less than or equal to the Threshold
Appreciation Price but is greater than $ (the "Initial Price"), a
fraction, equal to the Initial Price divided by the Exchange Price, of
one share of Common Stock per DECS; and
(c) if the Exchange Price is less than or equal to the Initial Price, one
share of Common Stock per DECS.
Accordingly, the value of the Common Stock to be received by investors (or,
as discussed below, the cash equivalent to be received in lieu of such Common
Stock) at the Exchange Date will not necessarily equal the Initial Price. The
numbers of shares of Common Stock per DECS specified in clauses (a), (b) and
(c) of the Exchange Rate are hereinafter referred to as the "Share Components."
Any shares of Common Stock delivered by the trust to investors that are not
affiliated with Crown Castle will be free of any transfer restrictions and the
investors will be responsible for the payment of all brokerage costs upon the
subsequent
9
<PAGE>
sale of such shares. Investors otherwise entitled to receive fractional shares
in respect of their aggregate holdings of DECS will receive cash in lieu
thereof. See "--Delivery of Common Stock and Reported Securities; No Fractional
Shares of Common Stock or Reported Securities" below. Notwithstanding the
foregoing, (1) in the case of certain dilution events, the Exchange Rate will
be subject to adjustment and (2) in the case of certain adjustment events, the
consideration received by investors at the Exchange Date will be cash or
Reported Securities (as defined herein) or a combination thereof, rather than
(or in addition to) shares of Common Stock. See "--The Forward Contracts--
Dilution Adjustments" and "--The Forward Contracts--Adjustment Events" below.
The trust has adopted a fundamental policy to invest at least 65% of its
portfolio in the prepaid forward contracts. The prepaid forward contracts will
comprise approximately % of the trust's initial assets. The trust has also
adopted a fundamental policy that the trust may not dispose of the prepaid
forward contracts during the term of the trust and that the trust may not
dispose of the Treasury Securities held by the trust prior to the earlier of
their respective maturities and the termination of the trust except for the
partial liquidation of Treasury Securities following acceleration of one or
more prepaid forward contracts as described below under "--The Treasury
Securities." These fundamental policies of the trust may not be changed without
the vote of a "majority in interest" of the owners of the DECS. A "majority in
interest" means the lesser of (a) 67% of the DECS represented at a meeting at
which more than 50% of the outstanding DECS are represented and (b) more than
50% of the outstanding DECS.
The "Exchange Price" under any prepaid forward contract means the average
Closing Price (as defined below) per share of Common Stock on the 20 Trading
Days immediately prior to (but not including) the Exchange Date thereunder;
provided, however, that if there are not 20 Trading Days (as defined below) for
the Common Stock occurring later than the 60th calendar day immediately prior
to, but not including, the Exchange Date, the Exchange Price will be the market
value per share of Common Stock as of the Exchange Date as determined by a
nationally recognized independent investment banking firm that the
Administrator retains for this purpose. The Exchange Price will be calculated
in a different manner if the relevant seller carries out a Rollover Offering
(as defined below), as described under "--Rollover Offerings." The "Closing
Price" of any security on any date of determination means:
(1) the closing sale price (or, if no closing price is reported, the last
reported sale price) of such security (regular way) on the NYSE on such
date,
(2) if such security is not listed for trading on the NYSE on any such
date, as reported in the composite transactions for the principal
United States securities exchange on which such security is so listed,
(3) if such security is not so listed on a United States national or
regional securities exchange, as reported by The Nasdaq Stock Market,
(4) if such security is not so reported, the last quoted bid price for such
security in the over-the-counter market as reported by the National
Quotation Bureau or similar organization, or
(5) if such security is not so quoted, the average of the mid-point of the
last bid and ask prices for such security from at least three
nationally recognized investment banking firms that the Administrator
selects for such purpose.
A "Trading Day" is defined as a day on which the security the Closing Price
of which is being determined (A) is not suspended from trading on any national
or regional securities exchange or association or over-the-counter market at
the close of business and (B) has traded at least once on the national or
regional securities exchange or association or over-the-counter market that is
the primary market for the trading of such security.
For illustrative purposes only, the following chart shows the number of
shares of Common Stock or the amount of cash that an investor would receive for
each DECS at various Exchange Prices. The chart assumes that there will be no
adjustments to the Exchange Rate due to any of the events described under "--
The
10
<PAGE>
Forward Contracts--Dilution Adjustments" and "--The Forward Contracts--
Adjustment Events" below and that the prepaid forward contracts will not be
accelerated. There can be no assurance that the Exchange Price will be within
the range set forth below. Given the Initial Price of $ per DECS and the
Threshold Appreciation Price of $ , an investor would receive at the
Exchange Date the following number of shares of Common Stock or amount of cash
(if all sellers exercise the Cash Delivery Option) per DECS:
<TABLE>
<CAPTION>
Amount
Exchange Price of Number of Shares of of
Common Stock Common Stock Cash
----------------- ------------------- ------
<S> <C> <C>
</TABLE>
As the foregoing chart illustrates, if at the Exchange Date, the Exchange
Price is greater than $ , the trust will be obligated to deliver shares
of Common Stock per DECS, resulting in an investor receiving only percent of
the appreciation in market value above $ . If at the Exchange Date, the
Exchange Price is greater than $ and less than or equal to $ , the trust
will be obligated to deliver only a fraction of a share of Common Stock having
a value at the Exchange Price equal to $ , resulting in an investor
receiving none of the appreciation in market value. If at the Exchange Date,
the Exchange Price is less than or equal to $ , the trust will be obligated
to deliver one share of Common Stock per DECS, regardless of the market price
of such share, resulting in an investor realizing the entire loss on the
decline in market value of the Common Stock.
The following table sets forth information regarding the distributions to
be received on the Treasury Securities held by the trust, the portion of each
year's distributions that will constitute a return of capital for U.S. federal
income tax purposes and the amount of original issue discount accruing on the
Treasury Securities with respect to an investor who acquires its DECS at the
Initial Price from the underwriters in the original offering. See "Certain
United States Federal Income Tax Considerations."
<TABLE>
<CAPTION>
Annual Gross Annual
Annual Gross Distributions from Inclusion of Original Issue
Distributions from Treasury Securities Annual Return of Discount in Income
Year Treasury Securities per DECS Capital per DECS per DECS
---- ------------------- ------------------- ---------------- ---------------------------
<S> <C> <C> <C> <C>
1999.................... $ $ $ $
2000....................
2001....................
2002....................
</TABLE>
The trust will pay the annual distribution of $ per DECS quarterly on
each , , and (or, if any such date is not a Business Day, on the
next succeeding Business Day), commencing , 1999. Quarterly distributions
on the DECS will consist solely of the cash received from the
Treasury Securities. The trust will not be entitled to any dividends that may
be declared on the Common Stock.
Enhanced Yield; Less Potential for Equity Appreciation than Common Stock; No
Depreciation Protection
The yield on the DECS is higher than the current dividend yield on the
Common Stock, which currently does not pay dividends. However, there is no
assurance that the yield on the DECS will be higher than the dividend yield on
the Common Stock over the term of the trust. In addition, the opportunity for
equity appreciation afforded by an investment in the DECS is less than the
opportunity for equity appreciation afforded by a direct investment in the
Common Stock because the value of the Common Stock to be received by owners of
the DECS at the Exchange Date (the "Amount Receivable at the Exchange Date")
will generally exceed the Initial Price only if the Exchange Price exceeds the
Threshold Appreciation Price (which represents an appreciation of % over the
Initial Price) and because investors will be entitled to receive at the
Exchange Date only % (the percentage equal to the Initial Price divided by
the Threshold Appreciation Price) of any appreciation of the value of the
Common Stock in excess of the Threshold Appreciation Price. Moreover, DECS
investors will bear the entire decline in value if the Exchange Price on the
Exchange Date is less than the Initial Price. Additionally, because the
Exchange Price is generally determined based on a 20
11
<PAGE>
Trading Day average, the value of a share of Common Stock distributed on the
Exchange Date may be more or less than the Exchange Price used to determine the
Amount Receivable at the Exchange Date.
Crown Castle
Crown Castle is a leading owner and operator of towers and transmission
networks for wireless communications and broadcast companies. A prospectus and
prospectus supplement that describe Crown Castle and the Common Stock that
owners of DECS may receive are attached to this prospectus.
Owners of DECS will not be entitled to any rights with respect to the Common
Stock (including, without limitation, voting rights and rights to receive
dividends or other distributions in respect thereof) unless and until such
time, if any, as the sellers deliver shares of Common Stock to the trust
pursuant to the prepaid forward contracts and the trust has distributed such
shares to the owners of the DECS.
The Common Stock has been listed on The Nasdaq National Market under the
symbol "TWRS" since August 18, 1998. The following table sets forth, for the
indicated periods, the high and low sales prices of the Common Stock, as
reported on The Nasdaq National Market. Crown Castle has never paid cash
dividends on the Common Stock and has stated that it does not anticipate paying
cash dividends on the Common Stock in the foreseeable future. As of , 1999,
there were recordholders of the Common Stock. Crown Castle's fiscal year end
is December 31.
<TABLE>
<CAPTION>
High Low
------ ------
<S> <C> <C>
Fiscal 1999 Third Quarter........................................ $25.50 $19.31
Fiscal 1999 Second Quarter....................................... 21.50 16.38
Fiscal 1999 First Quarter........................................ 23.50 16.63
Fiscal 1998 Fourth Quarter....................................... 23.50 9.87
Fiscal 1998 Third Quarter........................................ 13.31 6.00
</TABLE>
Crown Castle is not affiliated with the trust, will not receive any of the
proceeds from the sale of the DECS by the trust and will have no obligations
with respect to the DECS or the prepaid forward contracts. This prospectus
relates only to the DECS offered hereby and does not relate to Crown Castle or
the Common Stock. Crown Castle has filed a registration statement with the SEC
with respect to the shares of Common Stock that may be delivered to the trust
by the sellers, and by the trust to the owners of DECS, at the Exchange Date or
upon earlier acceleration of any of the prepaid forward contracts. The
prospectus and prospectus supplement of Crown Castle constituting a part of
such registration statement include information relating to Crown Castle and
the Common Stock, including certain risk factors relevant to an investment in
the Common Stock. The prospectus and prospectus supplement of Crown Castle are
being attached hereto and delivered to prospective purchasers of DECS together
with this prospectus for convenience of reference only. The Crown Castle
prospectus and prospectus supplement are not part of this prospectus, and are
not incorporated by reference into this prospectus. The sellers did not
prepare, and are not responsible for, the Crown Castle prospectus or prospectus
supplement.
The Forward Contracts
General. The trust will enter into the prepaid forward contracts with the
sellers obligating each seller to deliver to the trust at the Exchange Date
under its prepaid forward contract a number of shares of Common Stock equal to
the initial number of shares of Common Stock subject to the prepaid forward
contract multiplied by the Exchange Rate. The Exchange Rate is equal to,
subject to adjustment as described in "--Dilution Adjustments; Adjustment
Events" below,
(1) if the Exchange Price is greater than the Threshold Appreciation Price,
;
(2) if the Exchange Price is less than or equal to the Threshold
Appreciation Price but greater than the Initial Price, the Initial
Price divided by the Exchange Price; and
(3) if the Exchange Price is less than or equal to the Initial Price, one.
12
<PAGE>
The purchase price under the prepaid forward contracts is equal to $ per
share of Common Stock and $ in total and is payable to the sellers by the
trust on the closing of this offering. The purchase price of the prepaid
forward contracts was arrived at by arm's length negotiations between the trust
and the sellers taking into consideration factors including the price, expected
dividend level and volatility of the Common Stock, current interest rates, the
term of the prepaid forward contracts, current market volatility generally, the
collateral pledged by the sellers to secure their obligations under their
respective prepaid forward contracts, the value of other similar instruments
and the costs and anticipated proceeds of the offering of the DECS. All matters
relating to the administration of the prepaid forward contracts will be the
responsibility of either the trust's Administrator or its Custodian.
Although each seller currently intends to deliver shares of Common Stock at
the Exchange Date, each seller may, at its option, deliver cash in lieu of
delivering all, but not less than all, of the shares of Common Stock otherwise
deliverable by it on the Exchange Date (the "Cash Delivery Option"), except
where such delivery would violate applicable state law. The amount of cash
deliverable by any seller who exercises the Cash Delivery Option will be equal
to the product of the number of shares of Common Stock otherwise deliverable by
that seller on the Exchange Date multiplied by the Exchange Price. On or prior
to the 25th Business Day prior to the Exchange Date, each seller will notify
the trust concerning its exercise of the Cash Delivery Option, and the trust in
turn will notify The Depository Trust Company and publish a notice in a daily
newspaper of national circulation stating whether the owners of DECS will
receive shares of Common Stock or cash or both.
Extension and Acceleration of the Exchange Date at the Option of
Sellers. Any seller that elects the Cash Delivery Option and is making a
Rollover Offering may extend the Exchange Date under its prepaid forward
contract to , 2002. If a seller extends the Exchange Date, it will not be
required to deliver the cash value of the Common Stock under its prepaid
forward contract until , 2002. However, once the seller extends the Exchange
Date, that seller can then accelerate the Exchange Date under its prepaid
forward contract to any date between , 2002 and , 2002. If any seller
extends or accelerates the Exchange Date under its prepaid forward contract,
the trust will receive the cash payable under that contract within five
Business Days after the extended or accelerated Exchange Date, and the amount
of cash will be calculated as of the extended or accelerated Exchange Date.
Any seller extending the Exchange Date under its prepaid forward contract in
connection with a Rollover Offering must also deliver to the trust an
additional amount of cash on the extended or accelerated Exchange Date to be
distributed as an additional distribution to the holders of the DECS in respect
of the period between the originally scheduled Exchange Date and the Exchange
Date as so extended or accelerated. In addition, such seller will be required
to pledge U.S. Treasury securities to secure its obligation to deliver cash for
this additional distribution. See "--Collateral Requirements of the Forward
Contracts Acceleration." The amount of the additional distribution that would
be paid on the DECS would be equal to a portion of the regular quarterly
distribution on the DECS pro-rated to reflect the number of days by which the
Exchange Date is extended or accelerated and the proportion of all the Common
Stock covered by all of the prepaid forward contracts that are represented by
the prepaid forward contracts as to which the Exchange Date is being extended
or accelerated. For example, if the Exchange Date under all of the prepaid
forward contracts is extended to , 2002 and then accelerated to ,
2002 (i.e., two-thirds of the time between , 2002 and , 2002),
the additional distribution would be equal to two-thirds of the regular
quarterly distribution. If only forward purchase contracts representing one-
half of all of the Common Stock deliverable under the DECS are the subject of
the same extension and acceleration, then the additional distribution would be
equal to one-third of the regular quarterly distribution.
If some sellers elect to extend the Exchange Date under their prepaid
forward contracts in connection with Rollover Offerings and others do not, then
the originally scheduled Exchange Date of , 2002 will remain in effect for
the sellers who do not extend, the Exchange Price under those sellers' prepaid
forward contracts will be determined as described herein shortly before that
date, and the trust will distribute the cash and/or shares of Common Stock it
receives under those prepaid forward contracts to the holders of DECS on or
13
<PAGE>
shortly after that date. All sellers who do extend the Exchange Date under
their prepaid forward contracts will be required to extend to , 2002, and no
seller may then accelerate the Exchange Date under its prepaid forward contract
unless all sellers who have extended their Exchange Dates accelerate to the
same date. The Exchange Price under the accelerating sellers' prepaid forward
contracts will be calculated as described below immediately before the extended
or accelerated Exchange Date, and the trust will distribute the cash it
receives under those contracts, together with the additional cash amount
described in the preceding paragraph, to holders of the DECS on or shortly
after that date. Therefore, holders of DECS may receive the cash and/or shares
to which they are entitled on two (but not more than two) separate dates up to
three months apart, and the dates and basis on which the cash or shares to
which they are entitled will not be the same for the two distributions.
Rollover Offerings. Each seller has the option to deliver cash instead of
Common Stock on the Exchange Date (whether or not extended) by completing a
Rollover Offering to refinance the DECS.
The term "Rollover Offering" means a reoffering or refinancing of the DECS
effected by [all sellers electing the Cash Delivery Option] not earlier than
, 2002 by means of a completed public offering or offerings or another
similar offering (which may include one or more exchange offers), by or on
behalf of such seller[s]. If a seller elects to carry out a Rollover Offering,
the "Exchange Price" will be the Closing Price per share of Common Stock on the
Trading Day immediately preceding the date that the Rollover Offering is priced
(the "Pricing Date") or, if the Rollover Offering is priced after 4:00 p.m. New
York City time, on the Pricing Date, the Closing Price per share on the Pricing
Date.
If a seller carries out a Rollover Offering that is consummated on or before
, 2002, the cash payable by the seller will be delivered to the trust within
five Business Days after the Exchange Date (which may be extended and
accelerated as described above) instead of on the Exchange Date itself.
Accordingly, owners of the DECS may not receive a portion of the cash
deliverable in exchange for the DECS until the fifth Business Day after the
Exchange Date.
The trust will notify the owners of the DECS (1) if any seller elects to
settle with cash, and whether it elects to do so in connection with a Rollover
Offering, not less than 30 days nor more than 90 days prior to the Exchange
Date, (2) if any seller elects to extend the Exchange Date, not less than 30
days nor more than 90 days prior to the Exchange Date as in effect when the
election is made, and (3) if any seller accelerates the Exchange Date in
connection with a Rollover Offering, not later than the Exchange Date as in
effect when the election is made.
Dilution Adjustments. The Exchange Rate is subject to adjustment if Crown
Castle
(1) pays a stock dividend or makes a distribution, in either case, with
respect to Common Stock in shares of such stock,
(2) subdivides or splits its outstanding shares of Common Stock into a
greater number of shares,
(3) combines its outstanding shares of Common Stock into a smaller number
of shares,
(4) issues by reclassification (other than a reclassification pursuant to
clause (2), (3), (4) or (5) of the definition of Adjustment Event
below) of its shares of Common Stock any other equity securities of
Crown Castle, or
(5) issues rights or warrants (other than rights to purchase Common Stock
pursuant to a plan for the reinvestment of dividends or interest) to
all holders of Common Stock entitling them to subscribe for or purchase
shares of Common Stock at a price per share less than the Market Price
(as defined below) of the Common Stock on the Business Day next
following the record date for the determination of holders of Common
Stock entitled to receive such rights or warrants.
In the case of the events referred to in clauses (1), (2), (3) and (4)
above, the Exchange Rate will be adjusted by adjusting each of the Share
Components of the Exchange Rate in effect immediately prior to such event so
that the trust will be entitled under the prepaid forward contracts to receive
at the Exchange Date the number of shares of Common Stock (or, in the case of a
reclassification referred to in clause (4) above, the number of other equity
securities of Crown Castle issued pursuant thereto) which it would have owned
or been
14
<PAGE>
entitled to receive immediately following such event had the Exchange Date
occurred immediately prior to such event or any record date with respect
thereto.
In the case of the event referred to in clause (5) above, the Exchange Rate
will be adjusted by multiplying each of the Share Components of the Exchange
Rate in effect on the record date for the issuance of the rights or warrants
referred to in clause (5) above, by a fraction. The numerator of this fraction
is
(A) the number of shares of Common Stock outstanding on the record date for
the issuance of such rights or warrants, plus
(B) the number of additional shares of Common Stock offered for
subscription or purchase pursuant to such rights or warrants.
The denominator of this fraction is
(x) the number of shares of Common Stock outstanding on the record date for
the issuance of such rights or warrants, plus
(y) the number specified in clause (B) above multiplied by the quotient of
(I) the exercise price of such rights or warrants divided by
(II) the Market Price of the Common Stock on the Business Day next
following the record date for the determination of holders of
Common Stock entitled to receive such rights or warrants.
To the extent that such rights or warrants expire prior to the Exchange Date
and shares of Common Stock are not delivered pursuant to such rights or
warrants prior to such expiration, the Exchange Rate will be readjusted to the
Exchange Rate which would then be in effect had such adjustments for the
issuance of such rights or warrants been made upon the basis of delivery of
only the number of shares of Common Stock actually delivered pursuant to such
rights or warrants. For purposes of this paragraph, dividends will be deemed to
be paid as of the record date for such dividend.
"Market Price" means, as of any date of determination, the average Closing
Price per share of Common Stock on the 20 Trading Days immediately prior to
(but not including) the date of determination; provided, however, that if there
are not 20 Trading Days for the Common Stock occurring later than the 60th
calendar day immediately prior to, but not including, such date, the Market
Price will be determined as the market value per share of Common Stock as of
such date as determined by a nationally recognized investment banking firm that
the Administrator retains for such purpose.
All adjustments to the Exchange Rate will be calculated to the nearest
1/10,000th of a share of Common Stock (or, if there is not a nearest 1/10,000th
of a share, to the next higher 1/10,000th of a share). No adjustment in the
Exchange Rate will be made unless such adjustment would require an increase or
decrease of at least one percent therein; provided, however, that any
adjustments which by reason of the foregoing are not required to be made will
be carried forward and taken into account in any subsequent adjustment. If an
adjustment is made to the Exchange Rate pursuant to clauses (1), (2), (3), (4)
or (5) above, an adjustment will also be made to the Exchange Price as such
term is used throughout the definition of Exchange Rate. The required
adjustment to the Exchange Price will be made at the Exchange Date by
multiplying the Exchange Price by the cumulative number or fraction determined
pursuant to the Exchange Rate adjustment procedure described above. In the case
of the reclassification of any shares of Common Stock into any equity
securities of Crown Castle other than the Common Stock, such equity securities
will be deemed shares of Common Stock for all purposes. Each such adjustment to
the Exchange Rate and the Exchange Price will be made successively.
Adjustments Events. Each of the following events are called "Adjustment
Events":
(1) any dividend or distribution by Crown Castle to all holders of Common
Stock of evidences of its indebtedness or other assets (excluding any
dividends or distributions referred to in clause (1) of the first
paragraph under the caption "--Dilution Adjustments" above, any equity
securities issued pursuant to a reclassification referred to in clause
(4) of such paragraph and any Ordinary Cash
15
<PAGE>
Dividends (as defined below)) or any issuance by Crown Castle to all
holders of Common Stock of rights or warrants to subscribe for or
purchase any of its securities (other than rights or warrants referred
to in clause (5) of the first paragraph under the caption "--Dilution
Adjustments" above),
(2) any consolidation or merger of Crown Castle with or into another entity
(other than a merger or consolidation in which Crown Castle is the
continuing corporation and in which the Common Stock outstanding
immediately prior to the merger or consolidation is not exchanged for
cash, securities or other property of Crown Castle or another
corporation),
(3) any sale, transfer, lease or conveyance to another corporation of the
property of Crown Castle as an entirety or substantially as an
entirety,
(4) any statutory exchange of securities of Crown Castle with another
corporation (other than in connection with a merger or acquisition),
and
(5) any liquidation, dissolution or winding up of Crown Castle.
After the occurrence of any Adjustment Event, each seller will deliver at
the Exchange Date, in lieu of or (in the case of an Adjustment Event described
in clause (1) above) in addition to, shares of Common Stock as described
above, cash in an amount equal to
(A) if the Exchange Price is greater than the Threshold Appreciation Price,
multiplied by the Transaction Value (as defined below);
(B) if the Exchange Price is less than or equal to the Threshold
Appreciation Price but greater than the Initial Price, the product of
(x) the Initial Price divided by the Exchange Price multiplied by (y)
the Transaction Value; and
(C) if the Exchange Price is less than or equal to the Initial Price, the
Transaction Value;
provided, however, that if the consideration received by holders of Common
Stock in such Adjustment Event does not and may not at the option of such
holders include Reported Securities, then (except in the case of an Adjustment
Event solely of the type described in (1) above) (a) each seller's delivery
obligations under its prepaid forward contract will be accelerated and
promptly upon consummation of the Adjustment Event each seller will be
required to deliver cash in an amount equal to (x) if the Transaction Value is
greater than the Threshold Appreciation Price, multiplied by the
Transaction Value, (y) if the Transaction Value is less than or equal to the
Threshold Appreciation Price but greater than Initial Price, the Initial
Price, and (z) if the Transaction Value is less than or equal to the Initial
Price, the Transaction Value; (b) the Custodian will liquidate the Treasury
Securities acquired by the trust at closing and then held by the trust; and
(c) the amount delivered by the sellers as described in (a) above and the
proceeds of such liquidation will be distributed to the owners of the DECS.
Following an Adjustment Event, the Exchange Price, as such term is used in
the formula in the preceding paragraph and throughout the definition of
Exchange Rate, will be deemed to equal (A) if shares of Common Stock are
outstanding at the Exchange Date, the Exchange Price of the Common Stock, as
adjusted pursuant to the method described above under "--Dilution Adjustments"
otherwise zero, plus (B) the Transaction Value.
Notwithstanding the foregoing, with respect to any securities received by
holders of Common Stock in an Adjustment Event that
(1) are
(a) listed on a United States national securities exchange,
(b) reported on a United States national securities system subject to
last sale reporting,
(c) traded in the over-the-counter market and reported on the National
Quotation Bureau or similar organization, or
16
<PAGE>
(d) for which bid and ask prices are available from at least three
nationally recognized investment banking firms; and
(2) are either (x) perpetual equity securities or (y) non-perpetual equity
or debt securities with a stated maturity after the Exchange Date of
the DECS
("Reported Securities"), each seller will, in lieu of delivering cash in
respect of such Reported Securities received in an Adjustment Event, deliver a
number of such Reported Securities with a value equal to all cash amounts that
would otherwise be deliverable in respect of Reported Securities received in
such Adjustment Event, as determined in accordance with clause (2) of the
definition of Transaction Value, unless such seller has made an election to
exercise the Cash Delivery Option or such Reported Securities have not yet been
delivered to the holders entitled thereto following such Adjustment Event or
any record date with respect thereto. If a seller delivers any Reported
Securities, upon distribution thereof by the trust to owners of DECS, each
owner of a DECS will be responsible for the payment of any and all brokerage
and other transaction costs upon the sale of such Reported Securities. If,
following any Adjustment Event, any Reported Security ceases to qualify as a
Reported Security, then (x) the seller will not deliver such Reported Security
but instead will deliver an equivalent amount of cash and (y) notwithstanding
clause (2) of the definition of Transaction Value, the Transaction Value of
such Reported Security will mean the fair market value of such Reported
Security on the date such security ceases to qualify as a Reported Security, as
determined by a nationally recognized investment banking firm that the
Administrator retains for this purpose.
Because each DECS represents the right of the owner of the DECS to receive a
pro rata portion of the Common Stock or other assets delivered by the sellers
pursuant to the prepaid forward contracts, the amount of cash and/or the kind
and number of securities which the owners of DECS are entitled to receive after
an Adjustment Event will be adjusted following the date of such Adjustment
Event in the same manner and upon the occurrence of the same type of events as
described under the captions "--Dilution Adjustments" and "--Adjustment Events"
with respect to Common Stock and Crown Castle.
For purposes of the foregoing, the term "Ordinary Cash Dividend" means, with
respect to any consecutive 365-day period, any dividend with respect to Common
Stock paid in cash to the extent that the amount of such dividend, together
with the total amount of all other dividends on the Common Stock paid in cash
during such 365-day period, does not exceed on a per share basis 10% of the
average of the Closing Prices of the Common Stock over such 365-day period.
The term "Transaction Value" means
(1) for any cash received in any Adjustment Event, the amount of cash
received per share of Common Stock,
(2) for any Reported Securities received in any Adjustment Event, an amount
equal to (x) the average Closing Price per security of such Reported
Securities on the 20 Trading Days immediately prior to (but not
including) the Exchange Date multiplied by (y) the number of such
Reported Securities (as adjusted pursuant to the methods described
above under "--Dilution Adjustments" and "--Adjustment Events")
received per share of Common Stock, and
(3) for any property received in any Adjustment Event other than cash or
such Reported Securities, an amount equal to the fair market value of
the property received per share of Common Stock on the date such
property is received, as determined by a nationally recognized
investment banking firm that the Administrator retains for this
purpose;
provided, however, that in the case of clause (2),
(x) with respect to securities that are Reported Securities by virtue of
only clause (d) of the definition of Reported Securities above,
Transaction Value with respect to any such Reported Security means the
17
<PAGE>
average of the mid-point of the last bid and ask prices for such
Reported Security as of the Exchange Date from each of at least three
nationally recognized investment banking firms that the Administrator
retains for such purpose multiplied by the number of such Reported
Securities (as adjusted pursuant to the methods described above under
"--Dilution Adjustments" and "--Adjustment Events") received per share
of Common Stock, and
(y) with respect to all other Reported Securities, if there are not 20
Trading Days for any particular Reported Security occurring after the
60th calendar day immediately prior to, but not including, the Exchange
Date, Transaction Value with respect to such Reported Security means
the market value per security of such Reported Security as of the
Exchange Date as determined by a nationally recognized investment
banking firm that the Administrator retains for such purpose multiplied
by the number of such Reported Securities (as adjusted pursuant to the
methods described above under "--Dilution Adjustments" and "--
Adjustment Events") received per share of Common Stock.
For purposes of calculating the Transaction Value, any cash, Reported
Securities or other property receivable in an Adjustment Event will be deemed
to have been received immediately prior to the close of business on the record
date for such Adjustment Event or, if there is no record date for such
Adjustment Event, immediately prior to the close of business on the effective
date of such Adjustment Event.
No adjustments will be made for certain other events, such as offerings of
Common Stock by Crown Castle for cash or in connection with acquisitions.
Likewise, no adjustments will be made for any sales of Common Stock by the
sellers.
Each seller is required under its prepaid forward contract to notify the
trust promptly upon becoming aware that an event requiring an adjustment to
the Exchange Rate or which is an Adjustment Event is pending or has occurred.
The trust will, within ten Business Days following the occurrence of an event
that requires an adjustment to the Exchange Rate or the occurrence of an
Adjustment Event (or, in either case, if the trust is not aware of such
occurrence, as soon as practicable after becoming so aware), notify each owner
of DECS in writing of the occurrence of such event including a statement in
reasonable detail setting forth the method by which the adjustment to the
Exchange Rate or change in the consideration to be received by owners of DECS
following the Adjustment Event was determined and setting forth the revised
Exchange Rate or consideration, as the case may be. However, for any
adjustment to the Exchange Price, this notice will only disclose the factor by
which the Exchange Price is to be multiplied in order to determine which
clause of the Exchange Rate definition will apply at the Exchange Date.
Collateral Requirements of the Forward Contracts; Acceleration. Each
seller's obligations under its prepaid forward contract will be secured by a
pledge of one share of Common Stock for each share of Common Stock subject to
the prepaid forward contract (subject to adjustment in accordance with the
dilution provisions of the prepaid forward contract), pursuant to a Collateral
Agreement among the seller, the trust and The Bank of New York, as collateral
agent (the "Collateral Agent"). In addition, the obligation of any seller to
pay an additional amount in connection with the extension or acceleration of
the Exchange Date will be secured by a pledge of U.S. Treasury securities (the
"Additional Government Securities").
Unless they are in default in their obligations under their respective
Collateral Agreements, the sellers under two of the prepaid forward contracts
(representing 4,061,182 shares of Common Stock in the aggregate) will be
permitted to substitute for the pledged shares of Common Stock collateral
consisting of short-term, direct obligations of the U.S. Government. Any U.S.
Government obligations pledged as substitute collateral for shares of Common
Stock must have an aggregate market value at the time of substitution and at
daily mark-to-market valuations thereafter of not less than 150% (or, from and
after any Insufficiency Determination (as defined below) that is not cured by
the close of business on the next Business Day thereafter, as described below,
200%) of the product of the market price of the Common Stock at the time of
each valuation times the number of shares of Common Stock for which such
obligations are being substituted. Each of the Collateral Agreements provides
that, after an Adjustment Event, the relevant seller will pledge as
alternative collateral any Reported Securities, plus cash in an amount at
least equal to the Transaction Value of any consideration
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other than Reported Securities, received by it in respect of the maximum number
of shares of Common Stock subject to its prepaid forward contract at the time
of the Adjustment Event. The number of Reported Securities required to be
pledged will be adjusted if any event requiring a dilution adjustment under the
prepaid forward contracts occurs. The two sellers referred to above will be
permitted to substitute U.S. Government obligations for Reported Securities or
cash pledged after any Adjustment Event. Any U.S. Government obligations so
substituted must have an aggregate market value at the time of substitution and
at daily mark-to-market valuations thereafter of:
(A) in the case of obligations substituted for pledged Reported Securities,
not less than 150% (or, from and after any Insufficiency Determination
that is not cured by the close of business on the next Business Day
thereafter, as described below, 200%) of the product of the market
price per security of Reported Securities at the time of each valuation
times the number of Reported Securities for which such obligations are
being substituted; and
(B) in the case of obligations substituted for pledged cash, not less than
105% of the amount of cash for which such obligations are being
substituted.
The Collateral Agent will promptly pay over to the relevant seller any
dividends, interest, principal or other payments received by the Collateral
Agent in respect of any collateral, including any substitute collateral, unless
the seller is in default of its obligations under its Collateral Agreement, or
unless the payment of such amount to the seller would cause the seller's
collateral to become insufficient under its Collateral Agreement.
If the Collateral Agent determines (an "Insufficiency Determination") that
U.S. Government obligations pledged by a seller as substitute collateral fail
to meet the foregoing requirements at any valuation, or that a seller has
failed to pledge additional collateral required as a result of a dilution
adjustment increasing the maximum number of shares of Common Stock or Reported
Securities subject to its prepaid forward contract, and such failure is not
cured by the close of business on the next Business Day after such
determination, then, unless a Collateral Event of Default (as defined below)
under the relevant Collateral Agreement has occurred and is continuing, the
Collateral Agent will commence (1) sales of the collateral consisting of U.S.
Government obligations and (2) purchases, using the proceeds of such sales, of
shares of Common Stock or Reported Securities in an amount sufficient to cause
the collateral to meet the requirements under the relevant Collateral
Agreement. The Collateral Agent will discontinue such sales and purchases if at
any time a Collateral Event of Default under the relevant Collateral Agreement
has occurred and is continuing.
The occurrence of a Collateral Event of Default (as defined below) under any
seller's Collateral Agreement, or the bankruptcy or insolvency of a seller,
will cause an automatic acceleration of that seller's obligations under its
prepaid forward contract. A "Collateral Event of Default" under a Collateral
Agreement means, at any time,
(A) if no U.S. Government obligations are pledged as substitute collateral
at such time, failure of the collateral to consist of at least the
maximum number of shares of Common Stock subject to the relevant
seller's prepaid forward contract at such time (or, if an Adjustment
Event has occurred at or prior to such time, failure of the collateral
to include the amount of cash and the maximum number of any Reported
Securities required to be pledged by that seller as described above);
(B) if any U.S. Government obligations are pledged as substitute collateral
for shares of Common Stock (or Reported Securities) under that
Collateral Agreement at such time, failure of such U.S. Government
obligations to have a market value at such time of at least 105% of the
market price of the Common Stock (or the then-current market price per
security of Reported Securities, as the case may be) times the
difference between
(x) the maximum number of shares of Common Stock (or Reported
Securities) subject to the relevant seller's prepaid forward
contract at such time, and
(y) the number of shares of Common Stock (or Reported Securities)
pledged as collateral by that seller at such time; and
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(C) if any U.S. Government obligations are pledged as substitute collateral
for any cash under that Collateral Agreement at such time, failure of
such U.S. Government obligations to have a market value at such time of
at least 105% of such cash, if such failure is not cured within one
Business Day after notice thereof is delivered to the relevant seller.
Except as described below, upon acceleration of any seller's prepaid forward
contract, the Collateral Agent will to the extent permitted by law distribute
to the trust for distribution pro rata to investors the maximum number of
shares of Common Stock subject to such prepaid forward contract, in the form of
the shares of Common Stock then pledged by that seller, or cash generated from
the liquidation of U.S. Government obligations then pledged by that seller, or
a combination thereof (or, after an Adjustment Event, in the form of Reported
Securities then pledged, cash then pledged, cash generated from the liquidation
of U.S. Government obligations then pledged, or a combination thereof). In
addition, if by the Exchange Date any substitute collateral has not been
replaced by shares of Common Stock (or, after an Adjustment Event, cash or
Reported Securities) sufficient to meet the obligations under a seller's
prepaid forward contract, the Collateral Agent will distribute to the trust for
distribution pro rata to investors the market value of the shares of Common
Stock required to be delivered thereunder, in the form of any shares of Common
Stock then pledged by that seller plus cash generated from the liquidation of
U.S. Government obligations then pledged by that seller (or, after an
Adjustment Event, the market value of the alternative consideration required to
be delivered thereunder, in the form of any Reported Securities then pledged,
plus any cash then pledged, plus cash generated from the liquidation of U.S.
Government obligations then pledged).
If upon acceleration of a seller's prepaid forward contract, that seller is
subject to a bankruptcy or similar proceeding, the Collateral Agent will to the
extent permitted by law distribute to the trust for distribution pro rata to
the investors a number of shares of Common Stock, in the form of the shares of
Common Stock then pledged by that seller, or cash generated from the
liquidation of U.S. Government obligations then pledged by that seller, or a
combination thereof (or, after an Adjustment Event, in the form of Reported
Securities then pledged, cash then pledged, cash generated from the liquidation
of U.S. Government obligations then pledged, or a combination thereof), with an
aggregate value equal to the "Acceleration Value." The Administrator will
determine the Acceleration Value on the basis of quotations from independent
dealers. Each quotation will be for an amount that would be paid to the
relevant dealer in consideration of an agreement that would have the effect of
preserving the trust's rights to receive the number of shares of Common Stock
(or, after an Adjustment Event, Reported Securities, cash or a combination
thereof) subject to the relevant seller's prepaid forward contract on the
Exchange Date. The Administrator will request quotations from four nationally
recognized independent dealers on or as soon as reasonably practicable
following the date of acceleration. If four quotations are provided, the
Acceleration Value will be the arithmetic mean of the two quotations remaining
after disregarding the highest and lowest quotations. If two or three
quotations are provided, the Acceleration Value will be the arithmetic mean of
such quotations. If one quotation is provided, the Acceleration Value will be
such quotation. If no quotations are provided, the Acceleration Value will be
the aggregate value of the number of shares of Common Stock (or, after an
Adjustment Event, Reported Securities, cash or a combination thereof) that
would be required to be delivered under the relevant seller's prepaid forward
contract on the date of acceleration if the Exchange Date were redefined to be
the date of acceleration.
The trust's recourse to the sellers under two of the prepaid forward
contracts representing 938,818 shares of Common Stock in the aggregate (plus up
to an additional 645,000 shares if the underwriters' over-allotment option is
exercised in full) will be limited to the Common Stock (or, after an Adjustment
Event, cash or Reported Securities) pledged thereunder. Such sellers will not
be permitted to substitute U.S. Government obligations for shares of Common
Stock, Reported Securities or cash pledged under their Collateral Agreements.
Description of the Sellers. Specific information on the holdings of the
sellers, as required by the Securities Act of 1933, as amended (the "Securities
Act"), is included in the prospectus and prospectus supplement of Crown Castle
attached hereto.
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The Treasury Securities
The trust will purchase and hold a series of zero-coupon ("stripped") U.S.
Treasury securities with such face amounts and maturities as will provide
investors with a quarterly distribution of $ per DECS on each Distribution
Date during the term of the trust. The trust may invest up to 35% of its total
assets in these Treasury Securities. If any prepaid forward contract is
accelerated, the Administrator will liquidate a proportionate amount of the
Treasury Securities then held in the trust and will distribute the proceeds
thereof pro rata to investors, together with proceeds from the acceleration of
the prepaid forward contract. See "--The Forward Contracts--Collateral
Requirements of the Forward Contract; Acceleration" above and "--Trust
Termination" below.
If a seller extends the Exchange Date, it will be required to pledge
Additional Government Securities to the trust as collateral securing its
obligation to pay the additional amount described above under "--The Forward
Contracts--Extension and Acceleration of the Exchange Date at the Option of the
Sellers."
Temporary Investments
For cash management purposes, the trust may invest the proceeds of the
Treasury Securities held by the trust and any other cash held by the trust in
short-term obligations of the U.S. Government maturing no later than the
Business Day preceding the next distribution date.
Trust Termination
The trust will terminate automatically on or shortly after the latest
Exchange Date or following the distribution of all trust assets to investors,
if earlier.
If all of the prepaid forward contracts are accelerated, the Administrator
will liquidate any Treasury Securities then held by the trust and will
distribute the proceeds thereof pro rata to the investors, together with all
shares of Common Stock subject to the prepaid forward contracts that are
pledged by the sellers, or cash generated from the liquidation of U.S.
Government obligations then pledged by the sellers, or a combination thereof
(or, after an Adjustment Event, in the form of Reported Securities then
pledged, cash then pledged, cash generated from the liquidation of U.S.
Government obligations then pledged, or a combination thereof) or in certain
cases, the Acceleration Value of the prepaid forward contracts. After this
distribution, the term of the trust will expire. See "--The Forward Contracts--
Collateral Requirements of the Forward Contracts; Acceleration" above.
Delivery of Common Stock and Reported Securities; No Fractional Shares of
Common Stock or Reported Securities
Common Stock and Reported Securities delivered under the prepaid forward
contracts at the Exchange Date are expected to be distributed by the trust to
the investors pro rata shortly after the Exchange Date, except that no
fractional shares of Common Stock or Reported Securities will be distributed.
If more than one DECS is surrendered at one time by the same investor, the
number of full shares of Common Stock or Reported Securities to be delivered
upon termination of the trust, in whole or in part, as the case may be, will be
computed on the basis of the total number of DECS so surrendered at the
Exchange Date. Instead of delivering any fractional share or security, the
trust will sell a number of shares or securities equal to the total of all
fractional shares or securities that would otherwise be delivered to investors
of all DECS, and each such investor will be entitled to receive an amount in
cash equal to the pro rata portion of the proceeds of such sale (which may be
at a price lower than the Exchange Price).
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INVESTMENT RESTRICTIONS
The trust has adopted a fundamental policy that the trust may not purchase
any securities or instruments other than the Treasury Securities, the prepaid
forward contracts and the Common Stock or other assets received pursuant to the
prepaid forward contracts and, for cash management purposes, short-term
obligations of the U.S. Government; issue any securities or instruments except
for the DECS; make short sales or purchase securities on margin; write put or
call options; borrow money; underwrite securities; purchase or sell real
estate, commodities or commodities contracts; or make loans. The trust has also
adopted a fundamental policy that the trust may not dispose of the prepaid
forward contracts during the term of the trust and (except for a partial
liquidation of Treasury Securities following acceleration of any prepaid
forward contract as described above under "Investment Objectives and Policies--
The Treasury Securities") the trust may not dispose of the Treasury Securities
prior to the earlier of their respective maturities and the termination of the
trust.
Risk Factors for DECS
The DECS may trade at widely different prices before maturity depending upon
factors such as changes in the market price of the Crown Castle common stock
and other events that the trust cannot predict and are beyond the trust's
control. The text describes this in more detail below.
Internal Management; No Portfolio Management
The internal operations of the trust will be managed by its trustees; the
trust will not have any separate investment advisor. The trust has adopted a
fundamental policy that the trust may not dispose of the prepaid forward
contracts during the term of the trust and the trust may not dispose of the
Treasury Securities held by the trust prior to the earlier of their maturities
and the termination of the trust, except for a partial liquidation of Treasury
Securities following acceleration of a prepaid forward contract. As a result,
the trust will continue to hold the prepaid forward contracts even if there is
a significant decline in the market price of the Crown Castle common stock or
adverse changes in the financial condition of Crown Castle (or, after an
Adjustment Event, comparable developments affecting any Reported Securities or
the issuer of such securities). The trust will not be managed like a typical
closed-end investment company.
Comparison to Other Securities; Relationship to Crown Castle Shares
The DECS are different from ordinary securities because the value of the
Crown Castle common stock, cash or other securities you will receive on
termination of the trust may be more or less than the initial price of the
DECS. If the value of a share of Crown Castle common stock shortly before the
exchange date is less than the price you paid for each of your DECS, you will
suffer a loss on your investment in the DECS. If Crown Castle is insolvent or
bankrupt when the DECS mature, you might lose your entire investment. You take
all the risk of a fall in the value of Crown Castle common stock before the
exchange date.
In addition, you have less opportunity to make money from an increase in the
price of Crown Castle common stock by investing in the DECS than by investing
directly in Crown Castle common stock. The value of what you receive when the
trust is terminated will be greater than the initial price of the DECS only if
the value of Crown Castle common stock exceeds $ per share. This is an
increase of about % over the price of Crown Castle common stock when the
DECS were first offered for sale. In addition, you will receive only about
% of any increase in the value of a Crown Castle common stock above $
per share.
In return, you will receive annual distributions on the DECS at a rate of
%, which is more than the historical annual dividend on a Crown Castle
common stock, which currently pay no dividends. However, Crown Castle could pay
dividends in the future that are higher than the distributions that you receive
from the trust.
The trust cannot predict whether the price of a Crown Castle common stock
will rise or fall. However, the following factors may affect the trading price
of Crown Castle common stock:
. whether Crown Castle makes a profit and what its future prospects are;
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. trading in the capital markets generally;
. trading on Nasdaq, where the Crown Castle common stock is traded;
. the health of the tower and transmission networks industry; and
. whether Crown Castle issues securities like the DECS, or Crown Castle or
another person in the market transfers a large amount of Crown Castle
common stock.
As of the date of this prospectus, the sellers owned a total of shares of
Crown Castle common stock, of which the sellers may deliver up to shares of
Crown Castle common stock ( shares if the underwriters' over-allotment
option is exercised in full) to the trust at the exchange date.
Please refer to the attached prospectus and prospectus supplement for
information about Crown Castle and the Crown Castle common stock.
Impact of the DECS on the Market for the Crown Castle Shares
The trust cannot predict accurately how or whether investors will resell the
DECS and how easy it will be to resell them. Any market that develops for the
DECS is likely to influence and be influenced by the market for Crown Castle
common stock. For example, investors' anticipation that the sellers may deliver
Crown Castle common stock that represents approximately % of the currently
outstanding Crown Castle common stock when the DECS mature could cause the
price of Crown Castle common stock to be unstable or fall. The following
factors could also affect the price of Crown Castle common stock:
. sales of Crown Castle common stock by investors who prefer to invest in
Crown Castle by investing in the DECS;
. hedging of investments in the DECS by selling Crown Castle common stock
(called "selling short"); and
. arbitrage trading activity between the DECS and Crown Castle common
stock.
Dilution of Crown Castle Shares; Lack of Stockholder Rights
The terms of the DECS include some protections so you will receive
equivalent value when the DECS mature even if Crown Castle splits or combines
its shares, pays stock dividends or does other similar things that change the
amount of Crown Castle common stock currently outstanding. However, these terms
will not protect you against all events. For example, the amount you receive
when the DECS mature may not change if Crown Castle offers shares for cash or
in an acquisition, even if the price of Crown Castle common stock falls and
this causes the price of the DECS to fall. The trust has no control over
whether Crown Castle will offer shares or do something similar in the future or
the amount of any offering.
In addition, unless and until a seller decides to deliver Crown Castle
common stock to the trust when the DECS mature and until the trust distributes
the Crown Castle common stock to you, you will have no dividend rights or other
similar rights associated with Crown Castle common stock.
Crown Castle not Responsible for the DECS
Crown Castle has no obligation to make any payments on the DECS. Crown
Castle also does not have to take the trust's needs or your needs into
consideration for any reason. Crown Castle will not receive any money from the
sale of the DECS and did not decide to issue the DECS. Crown Castle did not
determine when the trust will issue the DECS, how much the trust will sell them
for or how many the trust will sell. Crown Castle is not involved in managing
or trading the DECS or determining or calculating the amount you will receive
when the DECS mature.
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DECS May be Difficult to Resell
The DECS are new and innovative securities, and there is currently no market
in which to resell them. The underwriters currently intend, but are not
obligated, to buy and sell the DECS. A resale market might not develop or, if
it does, might not give you the opportunity to resell your DECS and may not
continue until the DECS mature.
The trust has applied to have the DECS approved for listing on the Nasdaq
National Market. Nonetheless, the Nasdaq might not approve the application or
if approved, could revoke the listing after approval or stop trading of the
DECS at any time. If Nasdaq will no longer quote the DECS or stops trading
them, the trust will ask another national securities exchange to list the DECS
or another trading market to quote them. If the DECS are no longer listed or
traded on any securities exchange or trading market, or if a securities
exchange or trading market stops trading of the DECS, you may have difficulty
getting price information and it may be more difficult to resell the DECS.
Net Asset Value of the Trust
The trust is a newly organized closed-end investment company with no
previous operating history. Shares of closed-end investment companies
frequently trade at a discount from their net asset value, which is a risk
separate and distinct from the risk that the trust's net asset value will
decrease. The trust cannot predict whether the DECS will trade at, below or
above their net asset value. For investors who wish to sell the DECS in a
relatively short period of time after the DECS offering, the risk of the DECS
trading at a discount is more pronounced because the gain or loss that such
investors realize on their investment is likely to be depend more on whether
the DECS are trading at a discount or premium than upon the value of the
trust's assets. The trust will not redeem any DECS prior to the exchange date
of the Crown Castle common stock or the earlier termination of the trust.
Non-Diversified Status
The trust is considered non-diversified under the Investment Company Act of
1940, which means that the trust is not limited in the proportion of its assets
that may be invested in one security. Because the trust will only own the
Treasury Securities, the prepaid forward contracts or other assets subject to
the prepaid forward contracts, the DECS may be a riskier investment than would
be the case for an investment company with more diversified investments.
Tax Treatment of DECS Uncertain
No statutory, judicial or administrative authority directly addresses the
characterization of the DECS or instruments similar to the DECS for U.S.
federal income tax purposes. As a result, significant aspects of the U.S.
federal income tax consequences of an investment in the DECS are not certain.
There is no ruling from the Internal Revenue Service with respect to the DECS
and the Internal Revenue Service might not agree with the conclusions expressed
under the section "Certain United States Federal Income Tax Considerations" in
this prospectus.
Risk Factors for Crown Castle
You should carefully consider the information in the attached prospectus and
prospectus supplement of Crown Castle, including the risk factors for Crown
Castle on pages to of the attached prospectus supplement.
Risk Relating to Bankruptcy of the Sellers
It is possible that one or more of the sellers may be the subject of
proceedings under the U.S. Bankruptcy Code. The trust believes that each
prepaid forward contract constitutes a "securities contract" for purposes of
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the U.S. Bankruptcy Code, liquidation of which would not be subject to the
automatic stay provisions of the U.S. Bankruptcy Code in the event of the
bankruptcy of the relevant seller. It is, however, possible that a prepaid
forward contract could be determined not to qualify as a "securities contract"
for this purpose.
Proceedings under the U.S. Bankruptcy Code in respect of any seller may thus
cause a delay in settlement of that seller's prepaid forward contract, or
otherwise subject the prepaid forward contract to such proceedings. In turn,
this could adversely affect the timing of settlement and could impair the
trust's ability to distribute the Crown Castle common stock or other assets
subject to that prepaid forward contract and the related Collateral Agreement
to you on a timely basis and, as a result, could adversely affect the amount
received by you in respect of the DECS and/or the timing of such receipt.
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NET ASSET VALUE
The Administrator will calculate the net asset value of the portfolio at
least quarterly by dividing the value of the net assets of the trust (the value
of its assets less its liabilities) by the total number of DECS outstanding.
The trust's net asset value will be published semi-annually as part of the
trust's semi-annual report to investors and at such other times as the trust is
may determine. The Treasury Securities held by the trust will be valued at the
mean between the last current bid and asked prices or, if quotations are not
available, as determined in good faith by the trustees. Short-term investments
having a maturity of 60 days or less will be valued at cost with accrued
interest or discount earned included in interest to be received. Each of the
prepaid forward contracts will be valued at the mean of the bid prices the
trust receives from at least three independent broker-dealer firms unaffiliated
with the trust who are in the business of making bids on financial instruments
similar to the prepaid forward contracts and with terms comparable thereto. If
the trust (acting through the Administrator) is unable to obtain valuations
from three independent broker-dealer firms, as required by the preceding
sentence, on a timely basis or without unreasonable effort or expense, the
prepaid forward contracts will be valued at the median of bid prices received
from two such broker-dealer firms. If the trust (acting through the
Administrator) is unable to obtain a valuation for the prepaid forward
contracts that it believes to be reasonable through the above method, the value
of the prepaid forward contracts will be established at a level deemed to be
fair and reflective of the market value for the prepaid forward contracts based
on all appropriate factors relevant to the value of the prepaid forward
contracts as set forth in pricing guidelines adopted by the trustees.
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DESCRIPTION OF THE DECS
Each DECS represents an equal proportional interest in the trust. Upon
liquidation of the trust, investors are entitled to share pro rata in the net
assets of the trust available for distribution. DECS have no preemptive,
redemption or conversion rights. The DECS, when issued and outstanding, will be
fully paid and non-assessable. The only securities that the trust is authorized
to issue are the DECS offered hereby and those sold to the initial investor
referred to below. See "Underwriting."
Owners of DECS are entitled to one vote for each DECS held on all matters to
be voted on by investors and are not able to cumulate their votes in the
election of Trustees. The trustees of the trust have been selected initially by
Salomon Smith Barney as the initial investor in the trust. The trust intends to
hold annual meetings as required by the rules of Nasdaq.
The trustees may call special meetings of investors for action by investor
vote as may be required by either the Investment Company Act or the Declaration
of Trust. Investors have the right, upon the declaration in writing or vote of
more than two-thirds of the outstanding DECS, to remove a Trustee. The Trustees
will call a meeting of investors to vote on the removal of a Trustee upon the
written request of the record owners of 10% of the DECS or to vote on other
matters upon the written request of the record owners of 51% of the DECS
(unless substantially the same matter was voted on during the preceding 12
months). The Trustees shall establish, and notify the investors in writing of,
the record date for each such meeting, which shall be not less than 10 nor more
than 50 days before the meeting date. Owners at the close of business on the
record date will be entitled to vote at the meeting. The trust will also assist
in communications with other owners as required by the Investment Company Act.
Book-Entry System
The DECS will be issued in the form of one or more global securities (the
"Global Security") deposited with The Depository Trust Company (the
"Depositary") and registered in the name of a nominee of the Depositary.
The Depositary has advised the trust and the underwriters as follows: The
Depositary is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered pursuant to Section 17A of the Securities Exchange
Act of 1934, as amended. The Depositary was created to hold securities of
persons who have accounts with the Depositary ("participants") and to
facilitate the clearance and settlement of securities transactions among its
participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical
movement of certificates. Such participants include securities brokers and
dealers, banks, trust companies and clearing corporations. Indirect access to
the Depositary's book-entry system is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
Upon the issuance of a Global Security, the Depositary or its nominee will
credit the respective DECS represented by such Global Security to the accounts
of participants. The accounts to be credited will be designated by the
underwriters. Ownership of beneficial interests in such Global Security will be
limited to participants or persons that may hold interests through
participants. Ownership of beneficial interests by participants in such Global
Security will be shown on, and the transfer of those ownership interests will
be effected only through, records maintained by the Depositary or its nominee
for such Global Security. Ownership of beneficial interests in such Global
Security by persons that hold through participants will be shown on, and the
transfer of that ownership interest within such participant will be effected
only through, records maintained by such participant. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a Global Security.
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So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the DECS.
Except as set forth below, owners of beneficial interests in such Global
Security will not be entitled to have the DECS registered in their names and
will not receive or be entitled to receive physical delivery of the DECS in
definitive form and will not be considered the owners or holders thereof.
Shares of Common Stock or other assets deliverable in respect of, and any
quarterly distributions on, DECS registered in the name of or held by the
Depositary or its nominee will be made to the Depositary or its nominee, as the
case may be, as the registered owner or the holder of the Global Security. None
of the trust, any Trustee, the Paying Agent, the Administrator or the Custodian
for the DECS will have any responsibility or liability for any aspect of the
records relating to, or payments made on account of, beneficial ownership
interests in a Global Security or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
The trust expects that the Depositary, upon receipt of any payment in
respect of a permanent Global Security, will credit immediately participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the principal amount of such Global Security as shown on the
records of the Depositary. The trust also expects that payments by participants
to owners of beneficial interests in such Global Security held through such
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in "street name," and will be the responsibility of such
participants.
A Global Security may not be transferred except as a whole by the Depositary
to a nominee or a successor of the Depositary. If the Depositary is at any time
unwilling or unable to continue as depositary and a successor depositary is not
appointed by the trust within 90 days, the trust will issue DECS in definitive
registered form in exchange for the Global Security representing such DECS. In
that event, an owner of a beneficial interest in a Global Security will be
entitled to physical delivery in definitive form of DECS represented by such
Global Security equal in number to that represented by such beneficial interest
and to have such DECS registered in its name.
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MANAGEMENT AND ADMINISTRATION OF THE TRUST
Trustees
The internal operations of the trust will be managed by three Trustees, none
of whom is an "interested person" of the trust as defined in the Investment
Company Act; the trust will not have an investment adviser. Under the
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
applicable to grantor trusts, the Trustees will not have the power to vary the
investments held by the trust.
The names of the persons who will be elected by Salomon Smith Barney, the
sponsor/initial investor of the trust, to serve as the Trustees are set forth
below. The positions and the principal occupations of the individual Trustees
during the past five years are also set forth below.
<TABLE>
<CAPTION>
Principal Occupation
Name, Age and Address Title During Past Five Years
--------------------- ---------------- -----------------------
<S> <C> <C>
Donald J. Puglisi, 53.................. Managing Trustee Professor of Finance
Department of Finance University of Delaware
University of Delaware
Newark, DE 19716
William R. Latham, III, 54............. Trustee Professor of Economics
Department of Economics University of Delaware
University of Delaware
Newark, DE 19716
James B. O'Neill, 60................... Trustee Professor of Economics
Center for Economic University of Delaware
Education and
Entrepreneurship
University of Delaware
Newark, DE 19716
</TABLE>
Salomon Smith Barney will pay each Trustee who is not a director, officer or
employee of either the underwriters or the Administrator, or of any affiliate
thereof, in respect of his annual fee and anticipated out-of-pocket expenses, a
one-time, up-front fee of $10,800 in the aggregate. The trust's Managing
Trustee will also receive an additional up-front fee of $3,600 in the aggregate
for serving in that capacity. Except as otherwise noted, the sellers will
reimburse Salomon Smith Barney for any of these payments as part of the
expenses of the trust. The Trustees will not receive, either directly or
indirectly, any compensation, including any pension or retirement benefits,
from the trust. None of the Trustees receives any compensation for serving as a
trustee or director of any other affiliated investment company.
Administrator
The day-to-day affairs of the trust will be managed by The Bank of New York,
as Trust Administrator pursuant to an administration agreement. Under the
administration agreement, the Trustees have delegated most of their operational
duties to the Administrator, including without limitation, their duties to:
(1) receive invoices for and pay, or cause to be paid, all expenses
incurred by the trust;
(2) with the approval of the Trustees, engage legal and other professional
advisors (other than the independent public accountants for the trust);
(3) instruct the Paying Agent to pay distributions on DECS as described
herein;
(4) prepare and mail, file or publish all notices, proxies, reports, tax
returns and other communications and documents, and keep all books and
records, for the trust;
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<PAGE>
(5) at the direction of the Trustees, institute and prosecute legal and
other appropriate proceedings to enforce the rights and remedies of the
trust; and
(6) make all necessary arrangements with respect to meetings of Trustees
and any meetings of holders of DECS.
The Administrator will not, however, select the independent public accountants
for the trust or sell or otherwise dispose of the trust's assets (except in
connection with an acceleration of a prepaid forward contract, or the
settlement of the prepaid forward contracts at the Exchange Date, and upon
termination of the trust).
Either the trust or the Administrator may terminate the Administration
Agreement upon 60 days' prior written notice, except that no termination shall
become effective until a successor Administrator has been chosen and has
accepted the duties of the Administrator.
Except for its roles as Administrator, Custodian, paying agent, registrar
and transfer agent of the trust, and except for its role as Collateral Agent
under the Collateral Agreements, The Bank of New York has no other affiliation
with, and is not engaged in any other transactions with, the trust.
The address of the Administrator is 101 Barclay Street, New York, New York
10286.
Custodian
The trust's custodian (the "Custodian") is The Bank of New York pursuant to
a custodian agreement. In the event of any termination of the custodian
agreement by the trust or the resignation of the Custodian, the trust must
engage a new Custodian to carry out the duties of the Custodian as set forth in
the custodian agreement. Pursuant to the custodian agreement, the Custodian
will invest all net cash received by the trust in short-term U.S. Government
securities maturing on or shortly before the next quarterly distribution date.
The Custodian will also act as Collateral Agent under the Collateral Agreements
and will hold a perfected security interest in the Common Stock and U.S.
Government obligations or other assets consistent with the terms of the prepaid
forward contracts.
Paying Agent
The transfer agent, registrar and paying agent (the "Paying Agent") for the
DECS is The Bank of New York pursuant to a paying agent agreement. In the event
of any termination of the paying agent agreement by the trust or the
resignation of the Paying Agent, the trust will use its best efforts to engage
a new Paying Agent to carry out the duties of the Paying Agent.
Indemnification
The trust will indemnify each Trustee, the Administrator, the Custodian and
the Paying Agent with respect to any claim, liability, loss or expense
(including the costs and expenses of the defense against any claim or
liability) which it may incur in acting as Trustee, Administrator, Custodian or
Paying Agent, as the case may be, except in the case of willful misfeasance,
bad faith, gross negligence or reckless disregard of their respective duties or
where applicable law prohibits such indemnification. Salomon Smith Barney has
agreed to reimburse the trust for any amounts it may be required to pay as
indemnification to any Trustee, the Administrator, the Custodian or the Paying
Agent. Except as otherwise noted, the sellers in turn will reimburse Salomon
Smith Barney for all such reimbursements paid by it as part of the expenses of
the trust.
Distributions
The trust intends to distribute to investors on a quarterly basis the
proceeds of the Treasury Securities held by the trust. The first distribution,
reflecting the trust's operations from the date of this offering, will be made
on , 1999 to owners of record as of , 1999. Thereafter, the trust will
make distributions on ,
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<PAGE>
, and or, if any such date is not a Business Day, on the next
succeeding Business Day, of each year to owners of record as of each , ,
and , respectively. A portion of each such distribution should be treated
as a tax-free return of the investor's investment. See "Investment Objective
and Policies--Trust Assets" and "Certain United States Federal Income Tax
Considerations." If any prepaid forward contract is accelerated as described in
"Investment Objectives and Policies--The Forward Contracts--Collateral
Requirements of the Contract; Acceleration," each investor will receive its pro
rata share of the proceeds from the acceleration of that prepaid forward
contract and from the liquidation of a proportionate share of the Treasury
Securities then held in the trust. Upon termination of the trust as described
in "Investment Objectives and Policies--Trust Termination," each investor will
receive its pro rata share of any remaining net assets of the trust.
The trust does not permit the reinvestment of distributions.
Estimated Expenses
At the closing of this offering, Salomon Smith Barney will pay to each of
the Administrator, the Custodian and the Paying Agent, and to each Trustee, a
one-time, up-front amount in respect of such party's ongoing fees and, in the
case of the Administrator, anticipated expenses of the trust over the term of
the trust. The anticipated trust expenses to be borne by the Administrator
include, among other things, expenses for legal and independent accountants'
services, costs of printing proxies, DECS certificates and investor reports,
expenses of the trustees, fidelity bond coverage, stock exchange listing fees
and expenses of qualifying the DECS for sale in the various states. The one-
time, up-front payments described above total $ . Salomon Smith Barney also
will pay estimated organization costs of the trust in the amount of $ and
estimated costs of the trust in connection with the initial registration and
public offering of the DECS in the amount of $ at the closing of the
offering.
The amount payable to the Administrator in respect of ongoing expenses of
the trust was determined based on estimates made in good faith on the basis of
information currently available to the trust, including estimates furnished by
the trust's agents. Actual operating expenses of the trust may be substantially
more than this amount. Any additional expenses will be paid by Salomon Smith
Barney or, in the event of its failure to pay such amounts, the sellers, or, in
the event of the failure of either of Salomon Smith Barney, or the sellers to
pay such amounts, the trust. The sellers will reimburse Salomon Smith Barney
for certain expenses of the trust paid by it.
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<PAGE>
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the principal U.S. federal income tax
consequences that may be relevant to an owner of a DECS that is a "U.S.
Holder." A DECS owner will be treated as a U.S. Holder for U.S. federal income
tax purposes if the owner is:
. an individual who is a citizen or resident of the United States,
. a U.S. domestic corporation, or
. any other person that is subject to U.S. federal income taxation on a
net income basis in respect of its investment in DECS.
This summary is based on the U.S. federal income tax laws, regulations,
rulings and decisions now in effect, all of which are subject to change,
possibly on a retroactive basis. Except to the extent discussed below under
"Non-U.S. Holders," this summary applies only to U.S. Holders that will hold
DECS as capital assets, and only if the investor purchased the DECS in their
initial offering. This summary does not address all aspects of U.S. federal
income taxation that may be relevant to an investor in light of the investor's
individual investment circumstances, and does not address tax considerations
applicable to investors that may be subject to special tax rules, such as
dealers in securities or foreign currencies, traders in securities or
commodities electing to mark to market, financial institutions, insurance
companies, tax-exempt organizations, persons that will hold DECS as a position
in a "straddle" for tax purposes or as a part of a "synthetic security" or a
"conversion transaction" or other integrated investment comprised of a DECS and
one or more other investments, or persons that have a functional currency other
than the U.S. dollar.
This summary does not include any description of the tax laws of any state
or local governments or of any foreign government that may be applicable to the
DECS or to the owners thereof. It also does not discuss the tax consequences of
the ownership of the Common Stock or Reported Securities. Investors should
consult their own tax advisors in determining the tax consequences to them of
holding DECS, including the application to their particular situation of the
U.S. federal income tax considerations discussed below, as well as the
application of state, local or other tax laws.
There are no regulations, published rulings or judicial decisions addressing
the characterization for federal income tax purposes of securities with terms
substantially the same as the DECS. Pursuant to the terms of the Declaration of
Trust, the trust and every holder of the DECS agree to treat a DECS for U.S.
federal income tax purposes as a beneficial interest in a trust that holds
zero-coupon U.S. Treasury securities and the prepaid forward contracts. The
trust intends to report holders' income to the Internal Revenue Service in
accordance with this treatment. In addition, pursuant to the terms of the
prepaid forward contracts and the Declaration of Trust, the sellers, the trust
and every holder of a DECS will be obligated (in the absence of an
administrative determination or judicial ruling to the contrary) to
characterize the prepaid forward contracts for all tax purposes as forward
purchase contracts to purchase Common Stock at the Exchange Date (including as
a result of acceleration or otherwise), under the terms of which contract:
(a) at the time of issuance of the DECS the holder is required to deposit
irrevocably with the sellers a fixed amount of cash equal to the
purchase price of the DECS, less the purchase price of the Treasury
Securities, to assure the fulfillment of the obligation described in
clause (b) below, and
(b) at Maturity such cash deposit unconditionally and irrevocably will be
applied by the sellers in full satisfaction of the holder's payment
obligation under the forward contracts, and the sellers will deliver
to the holder the number of shares of Common Stock that the holder is
entitled to receive at that time pursuant to the terms of the DECS
(subject to the right of each seller to deliver cash in lieu of the
Common Stock).
Under this approach, the tax consequences of holding a DECS will be as
described below. However, prospective investors in the DECS should be aware
that no ruling is being requested from the Internal Revenue
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<PAGE>
Service with regard to the DECS and that the Internal Revenue Service might
take a different view as to the proper characterization of the DECS or of the
prepaid forward contracts and of the tax consequences to an investor.
Tax Status of the Trust
The trust will be taxable as a grantor trust owned solely by the present and
future holders of DECS for federal income tax purposes, and income received by
the trust will be treated as income of the holders in the manner set forth
below.
Tax Consequences to U.S. Holders
Tax Basis of the Treasury Securities and the Forward Contracts. Each
investor will be considered to be the owner of its pro rata portion of the
Treasury Securities and the prepaid forward contracts in the trust. The cost to
the investor of the DECS will be allocated among the investor's pro rata
portion of the Treasury Securities and the prepaid forward contracts (in
proportion to the fair market values thereof on the date on which the investor
acquired the DECS) in order to determine the investor's tax basis in its pro
rata portion of the Treasury Securities and the prepaid forward contracts. It
is currently anticipated that % and % of the net proceeds of the offering
will be used by the trust to purchase the Treasury Securities and as a payment
to the sellers under the prepaid forward contracts, respectively.
Recognition of Original Issue Discount on the Treasury Securities. The
Treasury Securities in the trust will consist of zero-coupon U.S. Treasury
securities. An investor will be required to treat its pro rata portion of each
Treasury Security in the trust as a bond that was originally issued on the date
the investor purchased its DECS and at an original issue discount equal to the
excess of the investor's pro rata portion of the amounts payable on such
Treasury Security over the investor's tax basis for the Treasury Security as
discussed above. The investor (whether on the cash or accrual method of tax
accounting) is required to include original issue discount (other than original
issue discount on short-term Treasury Securities as described below) in income
for federal income tax purposes as it accrues, in accordance with a constant
yield method, prior to the receipt of cash attributable to such income. Because
it is expected that more than 20% of the holders of DECS will be accrual basis
taxpayers, the investor will be required to include in income original issue
discount on any short-term Treasury Security (i.e., any Treasury Security with
a maturity of one year or less from the date it is purchased) held by the trust
as that original issue discount accrues. Unless an investor elects to accrue
the original issue discount on a short-term Treasury Security according to a
constant yield method based on daily compounding, the original issue discount
will be accrued on a straight-line basis. The investor's tax basis in a
Treasury Security will be increased by the amount of any original issue
discount included in income by the investor with respect to such Treasury
Security.
Treatment of the Forward Contracts. Each investor will be treated as having
entered into a pro rata portion of the prepaid forward contracts and, at the
Exchange Date, as having received a pro rata portion of the Common Stock (or
cash, Reported Securities or combination thereof) delivered to the trust. Under
existing law, an investor will not recognize income, gain or loss upon entry
into the prepaid forward contracts. An investor should not be required under
existing law to include in income additional amounts over the term of the
prepaid forward contracts. See "--Possible Alternative Treatment," below,
however.
Each of two sellers under two of the contracts representing in the aggregate
938,818 shares of Common Stock (plus up to an additional 645,000 shares of
Common Stock if the underwriters' overallotment option is exercised in full) is
a limited liability company "LLC", which in turn is wholly-owned by a grantor
retained annuity trust (each, a "GRAT"). Under the terms of the GRATs, the
GRATs will terminate in May 2001 and the trust estate will be distributed at
that time among several newly created trusts that will have different terms,
beneficiaries and trustees. It is possible that when the GRATs terminate an
investor would be treated as if it had exchanged its pro rata portion of the
prepaid forward contracts issued by the LLCs for a pro rata portion of new
prepaid forward contracts in a taxable exchange. In such a case, an investor
would recognize gain equal to the difference between the value of its pro rata
share of the prepaid forward contracts issued by the GRATs at
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<PAGE>
the time of the deemed exchange and the investor's basis in such pro rata
share. The investor's basis in each new prepaid forward contract would be equal
to the value of the contract at the time of the deemed exchange and the
investor's holding period in the new prepaid forward contract would begin on
the date after the deemed exchange. Gain on the deemed exchange would be long-
term capital gain if the investor had held the DECS for more than one year at
the time of the deemed exchange.
Sale of the DECS. Upon a sale of all or some of an investor's DECS, an
investor will be treated as having sold its pro rata portion of the Treasury
Securities and prepaid forward contracts underlying the DECS. The selling
investor will recognize gain or loss equal to the difference between the amount
realized and the investor's aggregate tax bases in its pro rata portion of the
Treasury Securities and the prepaid forward contracts. Any gain or loss
generally will be long-term capital gain or loss if the investor has held the
DECS for more than one year. If there has been a deemed exchange with respect
to the forward contracts issued by the LLCs, any gain or loss with respect to
the investor's pro rata portion of such contracts will be long-term capital
gain if the investor has held the DECS for more than one year after the deemed
exchange. The distinction between capital gain or loss and ordinary income or
loss is important for purposes of the limitations on an investor's ability to
offset capital losses against ordinary income. In addition, individuals
generally are subject to taxation at a reduced rate on long-term capital gains.
Distribution of the Common Stock. The delivery of Common Stock to the trust
pursuant to the prepaid forward contracts will not be taxable to the investors.
The distribution of Common Stock upon the termination of the trust will not be
taxable to the investors. An investor will have taxable gain or loss (which
will be short-term capital gain or loss) upon receipt of cash in lieu of
fractional shares of Common Stock distributed upon termination of the trust, in
an amount equal to the difference between the cash received and the portion of
the basis of the prepaid forward contracts allocable to fractional shares
(based on the relative number of fractional shares and full shares delivered to
the investor). Each investor's aggregate basis in its shares of Common Stock
will be equal to its basis in its pro rata portion of the prepaid forward
contracts less the portion of such basis allocable to any fractional shares of
Common Stock for which cash is received.
Distribution of Cash. If an investor receives cash upon dissolution of the
trust or as a result of a seller's election to deliver cash, the investor will
recognize capital gain or loss equal to any difference between the amount of
cash received and its tax basis in the DECS at that time. Such gain or loss
generally will be long-term capital gain or loss if the investor has held the
DECS for more than one year at the Exchange Date. If there has been a deemed
exchange with respect to the forward contracts issued by the LLCs, any gain or
loss with respect to the investor's pro rata portion of such contracts will be
long-term capital gain if the investor has held the DECS for more than one year
after the deemed exchange.
Distribution of Cash or Reported Securities as a Result of an Adjustment
Event. If as a result of an Adjustment Event, cash, Reported Securities, or a
combination of cash and Reported Securities is delivered pursuant to the
prepaid forward contracts, an investor will have taxable gain or loss upon
receipt equal to the difference between the amount of cash received, including
cash received in lieu of fractional Reported Securities, and its basis in its
pro rata portion of the prepaid forward contracts allocable to any shares of
Common Stock for which such cash or fractional Reported Securities were
received. In addition, if as a result of an Adjustment Event the Custodian
liquidates Treasury Securities, an investor will have taxable gain or loss upon
receipt of cash allocable to the liquidated Treasury Securities equal to the
difference between the amount of such cash and the investor's basis in its pro
rata portion of the Treasury Securities. Any gain or loss will be capital gain
or loss, and if the investor has held the DECS for more than one year, such
gain or loss generally will be long-term capital gain or loss. If there has
been a deemed exchange with respect to the forward contracts issued by the
LLCs, any gain or loss with respect to the investor's pro rata portion of such
contracts will be long-term capital gain if the investor has held the DECS for
more than one year after the deemed exchange. An investor's basis in any
Reported Securities received will be equal to its basis in its pro rata portion
of the prepaid forward contracts less the portion of such basis allocable to
any shares of Common Stock for which cash or fractional Reported Securities
were received. See "Investment Objectives and Policies--The Forward Contracts."
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Extension of Exchange Date. While not free from doubt, an extension of the
Exchange Date under a prepaid forward contract should not be a taxable event
and an investor therefore should not recognize gain upon such an extension.
Although there is no authority addressing the treatment of the cash
distribution paid on the extended Exchange Date (whether or not later
accelerated), the trust intends to file information returns with the Internal
Revenue Service on the basis that the cash distribution is ordinary income to
the investors. Investors should consult their own tax advisors concerning the
consequences of extending the Exchange Date, including the possibility that an
investor may be treated as realizing gain as a result of the extension and the
possibility that the cash distribution may be treated as a reduction in an
investor's tax basis in the DECS by analogy to the treatment of rebates or of
option premiums.
Possible Alternative Treatment. The Internal Revenue Service may contend
that a DECS should be characterized for federal income tax purposes in a manner
different from the approach described above. For example, the Internal Revenue
Service might assert that the prepaid forward contracts should be treated as
contingent debt obligations of the sellers that are subject to Treasury
regulations governing contingent payment debt instruments. If the Internal
Revenue Service were to prevail in making such an assertion, original issue
discount would accrue with respect to the prepaid forward contracts at a
"comparable yield" for the sellers under the prepaid forward contracts,
determined at the time the prepaid forward contracts are entered into. An
investor's pro rata portion of original issue discount in respect of the
prepaid forward contracts and original issue discount in respect of the
Treasury Securities might exceed the aggregate amount of the quarterly cash
distributions to the investor. In addition, under this treatment, the investor
would be required to treat any gain realized on the sale, exchange or
redemption of the DECS as ordinary income to the extent that such gain is
allocable to the prepaid forward contracts. Any loss realized on such sale,
exchange or redemption that is allocable to the prepaid forward contracts would
be treated as an ordinary loss to the extent of the investor's original issue
discount inclusions with respect to the prepaid forward contracts, and as
capital loss to the extent of loss in excess of such inclusions. It is also
possible that the Internal Revenue Service could take the view that an investor
should include in income the amount of cash actually received each year in
respect of the DECS, or that the DECS as a whole constitute a contingent
payment debt instrument subject to the rules described above.
Fees and Expenses of the Trust. An investor's pro rata portion of the
expenses in connection with the organization of the trust, underwriting
discounts and commissions and other offering expenses should be includible in
the cost to the owner of the DECS. However, there can be no assurance that the
Internal Revenue Service will not take a contrary view. If the Internal Revenue
Service were to prevail in treating such expenses as excludable from the
investor's cost of the DECS, such expenses would not be includible in the basis
of the assets of the trust and should instead be amortizable and deductible
over the term of the trust. If such expenses were treated as amortizable and
deductible, an individual investor who itemizes deductions would be entitled to
amortize and deduct (subject to any other applicable limitations on itemized
deductions) such expenses over the term of the trust only to the extent that
such amortized annual expenses together with the investor's other miscellaneous
deductions exceed 2% of such investor's adjusted gross income.
Proposed Legislation. Proposed legislation currently under consideration in
Congress would (if enacted into law in its current form) recharacterize some or
all of the net long-term capital gain arising from certain "constructive
ownership" transactions entered into after July 11, 1999 as ordinary income,
and would impose an interest charge on any such ordinary income. The proposed
legislation would have no immediate application to forward contracts in respect
of the stock of a domestic operating company, including the DECS transaction.
The proposed legislation would, however, grant discretionary authority to the
U.S. Treasury Department to promulgate regulations to expand the scope of
"constructive ownership" transactions to include forward contracts in respect
of the stock of all corporations. The proposed legislation separately would
direct the Treasury to promulgate regulations excluding from the scope of the
legislation a forward contract that does not convey "substantially all" of the
economic return on an underlying asset (which category may include the DECS
transaction). It is not possible to predict whether legislation addressing
constructive ownership transactions will be enacted by Congress, the form or
effective date of any such legislation, or the form or effective date that any
Treasury regulations promulgated thereunder might take.
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Non-U.S. Holders
In the case of an investor that is a non-resident alien individual or
foreign corporation (a "Non-U.S. Holder"), payments made with respect to the
DECS should not be subject to U.S. withholding tax, provided that the investor
complies with applicable certification requirements (including in general the
furnishing of an Internal Revenue Service Form W-8 or a substitute form). Any
capital gain realized upon the sale or other disposition of the DECS by a Non-
U.S. Holder generally will not be subject to U.S. federal income tax if
(a) such gain is not effectively connected with a U.S. trade or business and
(b) in the case of an individual, (i) the individual is not present in the
United States for 183 days or more in the taxable year of the sale or other
disposition, and (ii) the gain is not attributable to a fixed place of business
maintained by the individual in the United States.
A Non-U.S. Holder of the DECS that is subject to U.S. federal income
taxation on a net income basis with respect to the DECS should see the
discussion in "--Tax Consequences to U.S. Holders."
Backup Withholding Tax and Information Reporting
An investor in a DECS may be subject to information reporting and to backup
withholding tax at a rate of 31 percent of certain amounts paid to the investor
unless the investor (a) is a corporation or comes within certain other exempt
categories and, when required, provides proof of such exemption or (b) provides
a correct taxpayer identification number, certifies as to no loss of exemption
from backup withholding tax and otherwise complies with applicable requirements
of the backup withholding tax rules. Information reporting and backup
withholding tax will not apply to payments made to an owner of a DECS that is a
Non-U.S. Holder if such owner (a) is the beneficial owner of the DECS and
certifies as to its non-U.S. status, (b) is not the beneficial owner of the
DECS, but the beneficial owner of the DECS certifies as to its non-U.S. status,
or (c) otherwise establishes an exemption, provided that the trust or its agent
does not have actual knowledge that the investor or the beneficial owner is a
U.S. person.
Payment of the proceeds from the sale of a DECS to or through a foreign
office of a broker will not be subject to information reporting or backup
withholding tax, except that if the broker is (1) a U.S. person for U.S.
federal income tax purposes, (2) a controlled foreign corporation for U.S. tax
purposes, (3) a foreign person 50 percent or more of whose gross income from
all sources for the three-year period ending with the close of its taxable year
preceding the payment was effectively connected with a U.S. trade or business
or (4) with respect to payments made after December 31, 2000, a foreign
partnership that, at any time during its taxable year is 50% or more (by income
or capital interest) owned by U.S. persons or is engaged in the conduct of U.S.
trade or business, information reporting may apply to such payments. Payment of
the proceeds from a sale of a DECS to or through the U.S. office of a broker is
subject to information reporting and backup withholding tax unless the investor
or beneficial owner certifies as to its non-U.S. status or otherwise
establishes an exemption from information reporting and backup withholding.
Any amounts withheld under the backup withholding tax rules are not an
additional tax and may be credited against a U.S. Holder's U.S. federal income
tax liability, provided that the required information is furnished to the
Internal Revenue Service.
Recently issued Treasury regulations may change the certification procedures
relating to withholding and backup withholding on certain amounts paid to Non-
U.S. Holders after December 31, 2000. Prospective investors should consult
their tax advisors regarding the effect, if any, of such new Treasury
regulations on an investment in the DECS.
36
<PAGE>
UNDERWRITING
Subject to the terms and conditions stated in the underwriting agreement
dated the date hereof, each underwriter named below has severally agreed to
purchase, and the trust has agreed to sell to such underwriter, the number of
DECS set forth opposite the name of such underwriter.
<TABLE>
<CAPTION>
Name Number of DECS
---- --------------
<S> <C>
Salomon Smith Barney Inc...................................
Goldman, Sachs & Co........................................
---------
Total.................................................... 5,000,000
=========
</TABLE>
The underwriting agreement provides that the obligations of the several
underwriters to purchase the DECS included in this offering are subject to
approval of certain legal matters by counsel and to certain other conditions.
The underwriters are obligated to purchase all the DECS (other than those
covered by the over-allotment option described below) if they purchase any of
the DECS.
The underwriters, for whom Salomon Smith Barney Inc. and Goldman, Sachs &
Co. are acting as representatives, propose to offer some of the DECS directly
to the public at the public offering price set forth on the cover page of this
prospectus and some of the DECS to certain dealers at the public offering price
less a concession not in excess of $ per DECS. The underwriters may allow,
and such dealers may reallow, a concession not in excess of $ per DECS on
sales to certain other dealers. After the initial offering of the DECS to the
public, the public offering price and such concessions may be changed by the
representatives. The sales load of $ per DECS is equal to % of the initial
public offering price.
The underwriting agreement provides that the sellers will pay to the
underwriters $ per DECS as compensation for underwriting the DECS. As described
under "Fees and Expenses," the sellers will reimburse Salomon Smith Barney Inc.
on the closing date for certain expenses incurred in establishing the trust and
registering the DECS, except that Salomon Smith Barney Inc. and Goldman, Sachs
& Co. have agreed to bear the first $500,000 of such expenses.
The trust has granted to the underwriters an option, exercisable for 30 days
from the date of this prospectus, to purchase up to 645,000 additional DECS at
the same price per DECS as the initial DECS purchased by the underwriters. The
underwriters may exercise such option solely for the purpose of covering over-
allotments, if any, in connection with this offering. To the extent such option
is exercised, each underwriter will be obligated, subject to certain
conditions, to purchase a number of additional DECS approximately proportionate
to such underwriter's initial purchase commitment. In addition, Salomon Smith
Barney purchased DECS in connection with the organization of the trust.
Crown Castle, its executive officers and the sellers have agreed that, for a
period of 45 days from the date of this prospectus, they will not, without the
prior written consent of Salomon Smith Barney Inc., as representative of the
underwriters, offer, sell, contract to sell, or otherwise dispose of, any
shares of common stock of Crown Castle or any securities convertible into, or
exercisable or exchangeable for, common stock. Salomon Smith Barney Inc. in its
sole discretion may release any of the securities subject to these lock-up
agreements at any time without notice. However, this agreement will not
restrict the ability of Crown Castle and the sellers to take any of the actions
listed above in connection with the offering by the trust of the DECS or any
delivery of shares of Crown Castle common stock pursuant to the terms of the
DECS.
The DECS will be a new issue of securities with no established trading
market. The trust has applied to have the DECS approved for listing on the
Nasdaq National Market under the symbol " ." The underwriters intend to make
a market in the DECS, subject to applicable laws and regulations. However, the
underwriters are not obligated to do so and any such market-making may be
discontinued at any time at the sole discretion of the underwriters without
notice. Accordingly, no assurance can be given as to the liquidity of such
market.
37
<PAGE>
In connection with the formation of the trust, Salomon Smith Barney Inc.
subscribed for and purchased DECS for a purchase price of $100. Under the
prepaid forward contracts, the sellers will be obligated to deliver to the
trust Crown Castle common stock in respect of such DECS on the same terms as
the DECS offered hereby. Salomon Smith Barney Inc. sponsored the formation of
the trust for purposes of this offering, including selecting its initial
Trustees.
Pursuant to the prepaid forward contracts, the trust has agreed, subject to
the terms and conditions set forth therein, to purchase from the sellers a
number of shares of Crown Castle common stock equal to the total number of DECS
to be purchased by the Underwriters from the trust pursuant to the underwriting
agreement (including any DECS to be purchased by the Underwriters upon exercise
of the over-allotment option plus the number of DECS purchased by Salomon Smith
Barney in connection with the organization of the trust). Pursuant to the terms
of the prepaid forward contracts, each seller will deliver to the trust at the
Exchange Date a number of shares of Crown Castle common stock (or, at the
option of each seller, the cash equivalent) and/or such other consideration as
permitted or required by the terms of the prepaid forward contracts, that are
expected to have the same value as the shares of Crown Castle common stock
delivered pursuant to the DECS. The closing of the offering of the DECS is
conditioned upon execution of the prepaid forward contracts by the sellers and
the trust.
In connection with the DECS offering, the underwriters may over-allot, or
engage in syndicate covering transactions, stabilizing transactions and penalty
bids. Over-allotment involves syndicate sales of DECS or Crown Castle common
stock in excess of the number of DECS to be purchased by the underwriters in
the offering, which creates a syndicate short position. Syndicate covering
transactions involve purchases of the DECS or the Crown Castle common stock in
the open market after the distribution has been completed in order to cover
syndicate short positions. Stabilizing transactions consist of certain bids or
purchases of DECS or common stock made for the purpose of preventing or
retarding a decline in the market price of the DECS or common stock while the
offering is in progress. Penalty bids permit the underwriters to reclaim a
selling concession from a syndicate member when Salomon Smith Barney Inc. or
Goldman, Sachs & Co., in covering syndicate short positions or making
stabilizing purchases, repurchase DECS or common stock originally sold by the
syndicate member. These activities may cause the price of DECS or common stock
to be higher than the price that otherwise would exist in the open market in
the absence of such transactions. These transactions may be effected on the
Nasdaq National Market or in the over-the-counter market, or otherwise and, if
commenced, may be discontinued at any time.
In addition, in connection with this offering, certain of the underwriters
(and selling group members) may engage in passive market making transactions in
the DECS or common stock on the Nasdaq National Market, prior to the pricing
and completion of the DECS offering. Passive market making consists of
displaying bids on the Nasdaq National Market no higher than the bid prices of
independent market makers and making purchases at prices no higher than those
independent bids and effected in response to order flow. Net purchases by a
passive market on each day are limited to a specified percentage of the passive
market maker's average daily trading volume in the common stock during a
specified period and must be discontinued when such limit is reached. Passive
market making may cause the price of the common stock to be higher than the
price that otherwise would exist in the open market in the absence of such
transactions. If passive market making is commenced, it may be discontinued at
any time.
The underwriters have performed certain investment banking and advisory
services for Crown Castle from time to time for which they have received
customary fees and expenses. The underwriters may, from time to time, engage in
transactions with and perform services for Crown Castle in the ordinary course
of its business.
Crown Castle and the sellers have agreed to indemnify the underwriters
against certain liabilities, including liabilities under the Securities Act of
1933, or to contribute to payments the underwriters may be required to make in
respect of any of those liabilities. Crown Castle has agreed to pay $750,000 on
behalf of the sellers in respect of fees, expenses and other compensation in
connection with the DECS offering.
38
<PAGE>
LEGAL MATTERS
Certain legal matters will be passed upon for the trust and the underwriters
by Cleary, Gottlieb, Steen & Hamilton, New York, New York. Certain matters of
Delaware law will be passed upon for the trust by Richards, Layton & Finger,
Wilmington, Delaware. Certain legal matters will be passed upon for the sellers
by Kirkpatrick & Lockhart LLP.
EXPERTS
The statement of assets, liabilities and capital included in this prospectus
has been audited by , independent auditors, as stated in their report appearing
herein, and is included in reliance upon the report of such firm given upon
their authority as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
The trust has filed a registration statement for the DECS with the SEC.
Information about the DECS and the trust may be found in that registration
statement. You may read and copy the registration statement at the public
reference facilities of the SEC in Washington, D.C., Chicago, Illinois and New
York, New York. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. The Registration Statement is also available to
the public from the SEC's web site at http:\\www.sec.gov.
39
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustee and Securityholders
of DECS Trust V:
In our opinion, the accompanying statement of assets and liabilities
presents fairly, in all material respects, the financial position of DECS Trust
V (the "Trust") as of August 5, 1999, in conformity with generally accepted
accounting principles. This financial statement is the responsibility of the
Trust's management; our responsibility is to express an opinion on this
financial statement based on our audit. We conducted our audit of this
financial statement in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the statement of assets and liabilities is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement, assessing the
accounting principles used and significant estimates made by the Trust's
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above.
/s/ PricewaterhouseCoopers, LLP
New York, New York
August 5, 1999
40
<PAGE>
DECS TRUST V
STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
August 5, 1999
<TABLE>
<S> <C>
ASSETS
Cash...................................................................... $100
Total Assets.............................................................. $100
LIABILITIES
Total Liabilities......................................................... $
----
NET ASSETS................................................................ $100
CAPITAL
DECS, 1 DECS issued and outstanding....................................... $100
</TABLE>
The accompanying notes are an integral part of this statement.
41
<PAGE>
DECS TRUST V
NOTES TO STATEMENT OF ASSETS, LIABILITIES AND CAPITAL
August 5, 1999
I. Organization
DECS Trust V, organized as a Delaware business trust on April 22, 1999, is a
closed-end management investment company registered under the Investment
Company Act of 1940. The term of the trust is anticipated to expire in the year
2002; however, the exact date will be determined in the future. The trust may
be dissolved prior to its planned termination date under certain circumstances
as outlined in the registration statement.
The trust has registered 5,645,000 DECS representing shares of beneficial
interest in the trust. The only securities that the trust is authorized to
issue are the DECS. Each of the DECS represents the right to receive
(a) quarterly distributions during the term of the trust, and (b) upon the
conclusion of the term of the trust (the "Exchange Date"), certain shares of
common stock (the "Common Stock") or cash with an equivalent value (such
amounts determined as described in the registration statement). The DECS are
not subject to redemption prior to the Exchange Date or the earlier termination
of the trust. The trust will hold a series of zero-coupon U.S. Treasury
securities and one or more prepaid forward contracts relating to the Common
Stock. The business activities of the trust are limited to the matters
discussed above. The trust will be treated as a grantor trust for U.S. federal
income tax purposes.
On August 4, 1999, the trust issued one DECS to Salomon Smith Barney Inc. in
consideration for a purchase price of $100.
II. Organizational Costs, Fees and Expenses
Organizational costs and ongoing fees of the trust will be borne by Salomon
Smith Barney Inc.
III. Management and Administration of Trust
The internal operation of the trust will be managed by its trustees; the
trust will not have a separate investment adviser. The trust will be overseen
by three trustees, and its daily administration will be carried out by The Bank
of New York as the administrator. The Bank of New York will also serve as the
trust's custodian, paying agent, registrar and transfer agent with respect to
the DECS.
42
<PAGE>
DECS/SM/
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DECS TRUST V
(Subject to Exchange into Common Stock of Crown Castle
International Corp.)
--------
PROSPECTUS
, 1999
--------
Salomon Smith Barney
Goldman, Sachs & Co.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
1. Financial Statements
Part A--(i) Report of Independent Accountants
(ii) Statement of Assets and Liabilities as of August 5, 1999
Part B--none
2. Exhibits
<TABLE>
<C> <S>
(a)(1)(A) --Declaration of Trust dated as of April 22, 1999/**/
--Amended and Restated Declaration of Trust dated as of July 14,
(a)(1)(B) 1999/**/
--Amended and Restated Declaration of Trust dated as of August 4,
(a)(1)(C) 1999
(a)(2)(A) --Certificate of Trust dated July 14 1999/**/
(a)(2)(B) --Restated Certificate of Trust dated July 14, 1999/**/
(a)(2)(C) --Restated Certificate of Trust dated August 5, 1999
(b) --Not applicable
(c) --Not applicable
--Form of specimen certificate of DECS (included in Exhibit
(d)(1) 2(a)(1)(B))
(d)(2) --Portions of the Amended and Restated Declaration of Trust defining
the rights
of Holders of DECS (included in Exhibit 2(a)(1)(B))
(e) --Not applicable
(f) --Not applicable
(g) --Not applicable
(h) --Form of Underwriting Agreement
(i) --Not applicable
(j) --Form of Custodian Agreement
(k)(1) --Form of Administration Agreement
(k)(2) --Form of Paying Agent Agreement
(k)(3) --Form of Forward Contract
(k)(4) --Form of Collateral Agreement
(k)(5) --Form of Fund Expense Agreement
(k)(6) --Form of Fund Indemnity Agreement
(l) --Opinion and Consent of Counsel to the Trust
(m) --Not applicable
--Tax Opinion of Counsel to the Trust (Consent contained in Exhibit
(n)(1) 2(n)(1))
(n)(2) --Consent of Independent Public Accountants
(n)(3) --Consents to being named as Trustee
(o) --Not applicable
(p) --Form of Subscription Agreement
(q) --Not applicable
(r) --Financial Data Schedule
</TABLE>
- --------
/**/ Previously filed.
Item 25. Marketing Arrangements
See Exhibit 2(h) to this Registration Statement.
C-1
<PAGE>
Item 26. Other Expenses of Issuance and Distribution
The following table sets forth the estimated expenses to be incurred in
connection with the DECS offering described in this Registration Statement:
<TABLE>
<S> <C>
Registration fees.................................................. $36,094
Nasdaq National Market application fee............................. *
Printing (other than certificates)................................. *
Engraving and printing certificates................................ *
Fees and expenses of qualification under state securities laws
(including fees of counsel)....................................... *
Accounting fees and expenses....................................... *
Legal fees and expenses............................................ *
NASD fees.......................................................... 13,483
Miscellaneous...................................................... *
-------
Total............................................................ $ *
</TABLE>
- --------
/*/To be furnished by amendment.
Item 27. Person Controlled by or under Common Control with Registrant
The trust will be internally managed and will not have an investment
adviser. The information in the Prospectus under the caption "Management and
Administration of the Trust" is incorporated herein by reference.
Item 28. Number of Holders of Securities
As of the effective date of this Registration Statement:
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
-------------- ------------------------
<S> <C>
DECS representing shares of beneficial interest........ 1
</TABLE>
Item 29. Indemnification
The Underwriting Agreement (Exhibit 2(h) to this Registration Statement)
provides for indemnification.
The Amended and Restated Declaration of Trust filed as Exhibit 2(a)(1)(C)
to this Registration Statement provides for indemnification to each Trustee
against any claim or liability incurred in acting as Trustee of the trust,
except in the case of willful misfeasance, bad faith, gross negligence or
reckless disregard of the trustee's duties. The Custodian Agreement,
Administration Agreement and Paying Agent Agreement filed as Exhibits 2(j),
2(k)(1) and 2(k)(2) to this Registration Statement provide for indemnification
to the Custodian, Administrator and Paying Agent against any loss or expense
incurred in the performance of their obligations under the respective
agreements, unless such loss or expense is due to willful misfeasance, bad
faith, gross negligence or reckless disregard of their obligations. The Fund
Indemnity Agreement filed as Exhibit 2(k)(6) to this Registration Statement
provides that Salomon Smith Barney will indemnify the trust for certain
indemnification expenses incurred under the Amended and Restated Declaration
of Trust, the Custodian Agreement, the Administration Agreement and the Paying
Agent Agreement.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant, pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense
C-2
<PAGE>
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
Item 30. Business and other Connections of Investment Adviser
Not applicable.
Item 31. Location of Accounts and Records
The accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the Rules thereunder are
maintained as follows: journals, ledgers, securities records and other original
records are maintained principally at the offices of the Registrant, c/o
Salomon Smith Barney Inc., 388 Greenwich Street, New York, New York 10013 and
at the offices of The Bank of New York, the Registrant's Administrator,
Custodian, paying agent, transfer agent and registrar. All other records so
required to be maintained are maintained at the offices of the Registrant, c/o
Smith Barney Inc., 388 Greenwich Street, New York, New York 10013.
Item 32. Management Services
Not applicable.
Item 33. Undertakings
(a) The Registrant hereby undertakes to suspend the offering of the shares
covered hereby until it amends its prospectus contained herein if (1)
subsequent to the effective date of this Registration Statement, its net asset
value per share declines more than ten percent from its net asset value per
share as of the effective date of this Registration Statement or (2) the net
asset value per share increases to an amount greater than its net proceeds as
stated in its prospectus contained herein.
(b) The Registrant hereby undertakes that (i) for the purpose of determining
any liability under the Securities Act, the information omitted from the form
of prospectus filed as part of this Registration Statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the registrant under
Rule 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective; (ii) for the
purpose of determining any liability under the Securities Act, each post-
effective amendment that contains a form of prospectus shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of the securities at that time shall be deemed to be the initial bona
fide offering thereof.
C-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment
No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 5th day of August, 1999.
DECS TRUST V
/s/ Donald J. Puglisi
By: _________________________________
Managing Trustee
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed below by the following
person, in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/ Donald J. Puglisi Managing Trustee August 5, 1999
_________________________________
Donald J. Puglisi
/s/ William R. Latham III Trustee August 5, 1999
_________________________________
William R. Latham III
/s/ James B. O'Neill Trustee August 5, 1999
_________________________________
James B. O'Neill
</TABLE>
<PAGE>
SUBJECT TO COMPLETION, DATED AUGUST 5, 1999
Exhibit Index
<TABLE>
<CAPTION>
Exhibit Name of Exhibit
------- ---------------
<C> <S>
(a)(1)(A) --Declaration of Trust dated as of April 22, 1999/**/
(a)(1)(B) --Amended and Restated Declaration of Trust dated as of July 14, 1999/**/
(a)(1)(C) --Amended and Restated Declaration of Trust dated as of August 4, 1999
(a)(2)(A) --Certificate of Trust dated July 14, 1999/**/
(a)(2)(B) --Restated Certificate of Trust dated July 14, 1999/**/
(a)(2)(C) --Restated Certificate of Trust dated August 5, 1999
(b) --Not applicable
(c) --Not applicable
(d)(1) --Form of specimen certificate of DECS (included in Exhibit 2(a)(1)(B))
(d)(2) --Portions of the Amended and Restated Declaration of Trust defining the rights
of Holders of DECS (included in Exhibit 2(a)(1)(B))
(e) --Not applicable
(f) --Not applicable
(g) --Not applicable
(h) --Form of Underwriting Agreement
(i) --Not applicable
(j) --Form of Custodian Agreement
(k)(1) --Form of Administration Agreement
(k)(2) --Form of Paying Agent Agreement
(k)(3) --Form of Forward Contract
(k)(4) --Form of Collateral Agreement
(k)(5) --Form of Fund Expense Agreement
(k)(6) --Form of Fund Indemnity Agreement
(l) --Opinion and Consent of Counsel to the Trust
(m) --Not applicable
(n)(1) --Tax Opinion of Counsel to the Trust (Consent contained in Exhibit 2(n)(1))
(n)(2) --Consent of Independent Public Accountants
(n)(3) --Consents to being named as Trustee
(o) --Not applicable
(p) --Form of Subscription Agreement
(q) --Not applicable
(r) --Financial Data Schedule
</TABLE>
- --------
/**/ Previously filed.
<PAGE>
EXHIBIT (a)(1)(C)
AMENDED AND RESTATED
DECLARATION OF
TRUST
CONSTITUTING
DECS TRUST V
Dated as of August 4, 1999
<PAGE>
Table of Contents
Page
----
ARTICLE I
DEFINITIONS
ARTICLE II
TRUST DECLARATION; PURPOSES, POWERS AND
DUTIES OF THE TRUSTEES; ADMINISTRATION
<TABLE>
<S> <C> <C>
SECTION 2.1 Name.............................................................. 1
SECTION 2.2 Office............................................................ 1
SECTION 2.3 Resignation of Initial Trustee; Transfer of Beneficial Interest... 1
SECTION 2.4 Declaration of Trust; Purposes of the Trust; Statement of Intent.. 1
SECTION 2.5 General Powers and Duties of the Trustees......................... 1
SECTION 2.6 Portfolio Acquisition............................................. 1
SECTION 2.7 Portfolio Administration.......................................... 1
SECTION 2.8 Manner of Sales................................................... 1
SECTION 2.9 Limitations on Trustees' Powers................................... 1
SECTION 2.10 Legal Title to Trust Property..................................... 1
SECTION 2.11 Situs of Trust.................................................... 1
ARTICLE III
ACCOUNTS AND PAYMENTS
SECTION 3.1 The Trust Account.................................................. 1
SECTION 3.2 Payment of Fees and Expenses....................................... 1
SECTION 3.3 Distributions to Holders........................................... 1
SECTION 3.4 Segregation........................................................ 1
SECTION 3.5 Temporary Investments.............................................. 1
ARTICLE IV
REDEMPTION
SECTION 4.1 Redemption......................................................... 1
ARTICLE V
ISSUANCE OF CERTIFICATES; REGISTRY; TRANSFER OF DECS
SECTION 5.1 Form of Certificate................................................ 1
SECTION 5.2 Transfer of DECS; Issuance, Transfer and Exchange of Certificates.. 1
SECTION 5.3 Replacement of Certificates........................................ 1
SECTION 5.4 Limitation on Liability............................................ 1
SECTION 5.5 General Provisions Regarding the DECS.............................. 1
ARTICLE VI
ISSUANCE OF THE CONTRACTS
SECTION 6.1 Execution of the Contracts......................................... 1
</TABLE>
<PAGE>
ARTICLE VII
TRUSTEES
<TABLE>
<S> <C>
SECTION 7.1 Trustees........................................................... 1
SECTION 7.2 Vacancies.......................................................... 1
SECTION 7.3 Powers............................................................. 1
SECTION 7.4 Meetings........................................................... 1
SECTION 7.5 Resignation and Removal............................................ 1
SECTION 7.6 Liability.......................................................... 1
SECTION 7.7 Compensation....................................................... 1
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Meetings of Holders................................................ 1
SECTION 8.2 Books and Records; Reports......................................... 1
SECTION 8.3 Termination........................................................ 1
SECTION 8.4 Amendment and Waiver............................................... 1
SECTION 8.5 Accountants........................................................ 1
SECTION 8.6 Nature of Holder's Interest........................................ 1
SECTION 8.7 Delaware Law to Govern............................................. 1
SECTION 8.8 Notices............................................................ 1
SECTION 8.9 Severability....................................................... 1
SECTION 8.10 Counterparts....................................................... 1
SECTION 8.11 Successors and Assigns............................................. 1
</TABLE>
ii
<PAGE>
AMENDED AND RESTATED DECLARATION OF TRUST
This Amended and Restated Declaration of Trust, dated as of August 4,
1999 (the "Trust Agreement"), by and between Salomon Smith Barney Inc., as
---------------
sponsor (the "Sponsor"), Donald J. Puglisi, William R. Latham III and James B.
-------
O'Neill as trustees (the "Trustees"), Alan Rifkin, as initial sponsor, Tyler
--------
Dickson, as initial trustee, and the Holders (as defined herein), constituting
DECS Trust V (the "Trust").
-----
WITNESSETH:
WHEREAS, Alan Rifkin (the "Initial Sponsor") and Donald J. Puglisi, as
---------------
trustee, have previously entered into a Declaration of Trust dated as of April
22, as amended and restated as of July 14, 1999 pursuant to an Amended and
Restated Declaration of Trust by and among the Initial Sponsor, Donald J.
Puglisi and Tyler Dickinson (the "Initial Trustee") (as amended and restated,
the "Original Agreement"), creating the Trust;
------------------
WHEREAS, the Initial Sponsor desires to transfer his interest in the
Trust to the Sponsor;
WHEREAS, the Initial Trustee desires to resign as trustee of the
Trust, such resignation to be effective upon the appointment and acceptance of
the Trustees as provided herein;
WHEREAS, the Trustees hereby ratify and approve the transfer of the
interest of the Initial Sponsor in the Trust to the Sponsor;
WHEREAS, the parties hereto desire to amend and restate the Original
Agreement in certain respects; and
WHEREAS, the Initial Trustee, on behalf of the Trust, and the Sponsor
entered into a Subscription Agreement dated August 4, 1999 (the "Subscription
------------
Agreement") pursuant to which the Trust issued to the Sponsor one DECS in
- ---------
consideration of the aggregate purchase price therefor of $100.00;
NOW, THEREFORE, the parties hereto agree to amend and restate the
Original Agreement as provided herein. Upon the execution and delivery of
copies hereof by the parties hereto, the Original Agreement will be
automatically amended and restated in its entirety to read as provided herein.
ARTICLE I
DEFINITIONS
Whenever used in this Trust Agreement, the following words and phrases
shall have the meanings listed below. Any reference to any agreement shall be a
reference to such agreement as supplemented or amended from time to time.
"Act": The Delaware Business Trust Act, 12 Del. C. (S) 3801 et seq.
--- -- ---
<PAGE>
"Additional Distribution": Cash required to be delivered to the Trust
-----------------------
by a Seller in connection with the extension and/or acceleration of the Exchange
Date under such Seller's Contract.
"Additional Purchase Price": The Additional Purchase Price as defined
-------------------------
in the Contracts.
"Adjustment Event": An Adjustment Event as defined in the Contracts.
----------------
"Administration Agreement": The Administration Agreement, dated as of
------------------------
the date hereof, between the Administrator and the Trust, and any substitute
agreement therefor entered into pursuant to Section 2.5(a) hereof.
"Administrator": The Bank of New York or its successor as permitted
-------------
under Section 6.1 of the Administration Agreement or appointed pursuant to
Section 2.5(a) hereof.
"Business Day": A day on which the New York Stock Exchange, Inc. is
------------
open for trading that is not a day on which banks in The City of New York are
authorized or obligated by law to close.
"Cash Delivery Option": The Cash Delivery Option as defined in the
--------------------
Contracts.
"Certificate": Any certificate evidencing the ownership of DECS
-----------
substantially in the form of Exhibit A hereto.
"Closing Date": The Closing Date as defined in the Underwriting
------------
Agreement.
"Code": The Internal Revenue Code of 1986, as amended from time to
----
time; each reference herein to any section of the Code or any regulation
thereunder shall constitute a reference to any successor provision thereto.
"Collateral Agent": The Bank of New York or its successor as
----------------
permitted under the Collateral Agreements.
"Collateral Agreements": The Collateral Agreements among each of the
---------------------
Sellers, the Trust and the Collateral Agent, securing the Sellers' obligations
under the Contracts, substantially in the form of Exhibit B hereto.
"Commencement Date": The day on which the Underwriting Agreement is
-----------------
executed.
"Commission": The United States Securities and Exchange Commission.
----------
"Common Stock": Common Stock, $.01 par value, of the Company.
------------
"Company": Crown Castle International Corp., a Delaware corporation.
-------
"Contracts": The forward purchase agreements among the Trust and one
---------
or more existing shareholders of the Company, substantially in the form of
Exhibit C hereto.
2
<PAGE>
"Custodian": The Bank of New York or its successor as permitted under
---------
paragraph 11 of the Custodian Agreement or appointed pursuant to Section 2.5(a)
hereof.
"Custodian Agreement": The Custodian Agreement, dated as of August 4,
-------------------
1999, between the Custodian and the Trust, and any substitute agreement therefor
entered into pursuant to Section 2.5(a) hereof.
"DECS": The DECS issued by the Trust evidencing a Holder's undivided
----
interest in the Trust and right to receive a pro rata distribution upon
liquidation of the Trust Estate.
"Depositary": The Depository Trust Company, or any successor thereto.
----------
"Distribution Date": Each ____________, ____________, ____________
-----------------
and ____________ of each year commencing ______________, 1999, to and including
________________, 2002 or if any such date is not a Business Day, then the first
Business Day thereafter.
"Event of Default": An Event of Default as defined in the Contracts.
----------------
"Exchange": The distribution by the Trust to the Holders of the
--------
Shares, Reported Securities and/or cash delivered to the Trust pursuant to the
Contracts (or, to the extent one or more Sellers elect the Cash Delivery Option
under the Contracts, the amount in cash specified in such Contracts as payable
in respect thereof), on the Exchange Date.
"Exchange Date": With respect to any of the Contracts, the Exchange
-------------
Date as defined therein (as it may be extended or accelerated in accordance with
the terms thereof).
"Exchange Rate": The Exchange Rate as defined in the Contracts.
-------------
"Firm Purchase Price": The Firm Purchase Price as defined in the
-------------------
Contracts.
"Holder": The registered owner of any DECS as recorded on the books
------
of the Paying Agent.
"Indemnity Agreement": The Fund Indemnity Agreement dated as of the
-------------------
date hereof between the Trust and the Sponsor substantially in the form of
Exhibit D hereto.
"Investment Company Act": The Investment Company Act of 1940, as
----------------------
amended from time to time; each reference herein to any section of such Act or
any rule or regulation thereunder shall constitute a reference to any successor
provision thereto.
"Managing Trustee": The Trustee designated as such by the Trustees,
----------------
who hereby initially designate Donald J. Puglisi as the Managing Trustee.
"Option Closing Date": The settlement date for the sale of any Option
-------------------
DECS with respect to which the option provided for in Section 4(b) of the
Underwriting Agreement is exercised by the Underwriters.
"Original Agreement": The meaning specified in the recitals hereof.
------------------
3
<PAGE>
"Participant": A Person having an account with the Depositary.
-----------
"Paying Agent": The Bank of New York or its successor as permitted
------------
under Section 6.6 of the Paying Agent Agreement or appointed pursuant to Section
2.5(a) hereof.
"Paying Agent Agreement": The Paying Agent Agreement, dated as of the
----------------------
date hereof, between the Paying Agent and the Trust, and any substitute
agreement therefor entered into pursuant to Section 2.5(a) hereof.
"Person": An individual, a partnership, a corporation, a trust, a
------
limited liability company, an unincorporated association, a joint venture or
other entity or a government or any agency or political subdivision thereof.
"Prospectus": The prospectus of the Trust relating to the offering of
----------
the DECS and constituting a part of the Registration Statement, as first filed
with the Commission pursuant to Rule 497(b) or (h) under the Securities Act,
and as subsequently amended or supplemented by the Trust.
"Quarterly Distribution": $0. per DECS paid to each
---------------------- ----------------
Holder on each Distribution Date.
"Record Date": Each , , , and
-----------
of each year commencing , 1999.
"Registration Statement": Registration Statement on Form N-2
----------------------
(Registration Nos. 333-83965 and 811-09501) of the Trust, as amended.
"Reported Securities": Reported Securities as defined in the
-------------------
Contracts.
"Securities Act": The Securities Act of 1933, as amended from time to
--------------
time.
"Sellers": The Persons named as Sellers in the Contracts.
-------
"Shares": Shares of Common Stock to be delivered by the Sellers to
------
the Trust pursuant to the Contracts, and by the Trust to the Holders pursuant to
the DECS, on the Exchange Date.
"Temporary Investments": Direct short-term U.S. government
---------------------
obligations, as specified from time to time by the Trustees or through standing
instructions from the Trustees to the Administrator or the Paying Agent.
"Transfer Agent and Registrar": With respect to the Common Stock or
----------------------------
any Reported Securities at any time, the Person then acting as Transfer Agent
and Registrar for such Common Stock or Reported Securities.
"Treasury Securities": The meaning specified in Section 2.6(b)
-------------------
hereof.
"Trust Account": The account created pursuant to Section 3.1 hereof.
-------------
4
<PAGE>
"Trust Agreement": The meaning specified in the recitals hereof.
---------------
"Trust Estate": The Contracts and the Treasury Securities held at any
------------
time by the Trust, together with any Temporary Investments held at any time
pursuant to Section 3.5 hereof, and any proceeds thereof or therefrom and any
other moneys held at any time in the Trust Account.
"Trustee": The meaning specified in the recitals hereof.
-------
"Underwriters": Salomon Smith Barney Inc. and Goldman, Sachs & Co.
------------
each in its capacity as an underwriter of the DECS pursuant to the Underwriting
Agreement.
"Underwriting Agreement": The Underwriting Agreement as described in
----------------------
the Prospectus.
ARTICLE II
TRUST DECLARATION; PURPOSES, POWERS
AND DUTIES OF THE TRUSTEES; ADMINISTRATION
SECTION 2.1 Name. The Trust is named "DECS Trust V," as such name may
----
be modified from time to time by the Trustees following written notice to the
Holders and in which name the Trustees may conduct the affairs of the Trust,
make and execute contracts and other instruments on behalf of the Trust and sue
and be sued on behalf of the Trust. The Trust's activities may be conducted
under the name of the Trust or any other name deemed advisable by the Trustees.
SECTION 2.2 Office. The address of the principal office and
------
registered office for service of process of the Trust is Donald J. Puglisi, c/o
Puglisi & Associates, 850 Library Avenue, Suite 204, Newark, Delaware 19715.
On ten Business Days' written notice to the Holders, the Trustees may designate
another principal office.
SECTION 2.3 Resignation of Initial Trustee; Transfer of Beneficial
------------------------------------------------------
Interest; Ratification and Approval of Action of Either or Both of the Initial
- ------------------------------------------------------------------------------
Sponsor and the Initial Trustee.
- -------------------------------
(a) The Initial Sponsor hereby assigns, transfers, conveys and sets
over to the Sponsor all of its rights and interests in, to and under the
Original Agreement. The Sponsor hereby accepts such assignment effective as of
the date hereof.
(b) The Initial Trustee hereby resigns as trustee of the Trust, such
resignation to be effective upon the appointment and acceptance of the Trustees
pursuant to Section 2.4(b) of this Agreement. The Initial Trustee hereby
conveys, assigns and transfers to the Trustees, effective as of the date hereof,
and to their successors and assigns, all the rights, powers and trusts of the
Initial Trustee as trustee, under and pursuant to the Original Agreement, and
all property and money held by the Initial Trustee as trustee under the Original
Agreement. The Initial Trustee hereby represents to the Sponsor and the
Trustees that, at the time the Trustees'
5
<PAGE>
appointment as such becomes effective, it will hold no monies or other property
as trustee under the Original Agreement.
(c) The Sponsor and the Trustees hereby ratify and approve any and
all actions taken by either or both of the Initial Sponsor and the Initial
Trustee on behalf of the Trust on or prior to the date hereof.
SECTION 2.4 Declaration of Trust; Purposes of the Trust; Statement of
---------------------------------------------------------
Intent.
- ------
(a) The Sponsor hereby creates the Trust in order that it may acquire
the Treasury Securities, enter into the Contracts, issue and sell to the Sponsor
and the Underwriters the DECS, hold the Trust Estate in trust for the use and
benefit of all present and future Holders and otherwise carry out the terms and
conditions of this Trust Agreement, all for the purpose of achieving the
investment objectives set forth in the Prospectus.
(b) The Sponsor hereby appoints the Trustees of the Trust effective
as of the date hereof, to have all the rights, powers and duties set forth
herein and in the Act. Effective as of the date hereof, the Trustees shall have
all rights, powers and duties set forth herein and in the Act with respect to
accomplishing the purposes of the Trust. The Trustees hereby accept such
appointment and agree to hold the Trust Estate in trust for the use and benefit
of all present and future Holders, subject to all trusts, conditions and
provisions of this Agreement, and accept, upon the trusts expressed in this
Agreement, all the rights, powers and trusts of the Initial Trustee as trustee
under and pursuant to the Original Agreement and agree to be bound by all the
terms of the Original Agreement and this Agreement, such acceptance and
agreement to be effective as of the close of business on the date hereof.
(c) The Trust shall not engage in any activities other than those
required or authorized by the terms of this Agreement relating to the issuance,
sale and payment of the DECS in accordance with their terms, and the
acquisition, management, collection and holding of the Trust Estate, all in
accordance with the terms of this Agreement.
(d) It is the intention of the parties hereto that the Trust
constitute a business trust under the Act and that this Trust Agreement
constitute the governing instrument of the Trust. It is the intention of the
parties hereto that, for purposes of federal income taxes, state and local
income and franchise taxes imposed upon, measured by, or based upon gross or net
income, the Trust shall be treated as a grantor trust owned solely by the
present and future Holders and the provisions of this Agreement shall be
interpreted in a manner consistent with such intention.
(e) The Trustees hereby declare that they will accept and hold the
Trust Estate in trust for the use and benefit of all present and future Holders.
The Initial Trustee hereby resigns as trustee effective upon the appointment and
acceptance of the Trustees under the terms of this Agreement. The Sponsor
hereby waives the thirty (30) day notice requirement of Section 5 of the
Original Agreement. The Initial Sponsor has heretofore deposited with the
Initial Trustees the sum of $1 to accept and hold in trust hereunder until the
issuance and sale of the DECS to the Underwriters, whereupon such sum shall be
donated to an organization satisfying the requirements of Section 170(c)(2) of
the Code selected by unanimous consent of the Trustees.
6
<PAGE>
SECTION 2.5 General Powers and Duties of the Trustees. In furtherance
-----------------------------------------
of the provisions of Section 2.4 hereof, the Sponsor authorizes and directs the
Trustees, on behalf of the Trust:
(a) to enter into and perform (and, in accordance with Section 8.4(a)
hereof, amend), the Contracts, the Collateral Agreements, the Underwriting
Agreement, the Indemnity Agreement, the Custodian Agreement, the
Administration Agreement and the Paying Agent Agreement and to perform all
obligations of the Trustees (including the obligation to provide indemnity
hereunder and thereunder) and enforce all rights and remedies of the Trust
under each of such agreements; and if any of the Custodian Agreement, the
Administration Agreement, the Collateral Agreements and the Paying Agent
Agreement terminates, or the agent of the Trust thereunder resigns or is
discharged, to appoint a substitute agent and enter into a new agreement
with such substitute agent containing provisions substantially similar to
those contained in the agreement being terminated; provided that in any
such new agreement (i) the Custodian and the Paying Agent shall each be a
commercial bank or trust company organized and existing under the laws of
the United States of America or any state therein, shall have full trust
powers and shall have minimum capital, surplus and retained earnings of not
less than $100,000,000; and (ii) the Administrator and the Collateral Agent
shall each be a reputable financial institution qualified in all respects
to carry out its obligations under the Administration Agreement or the
Collateral Agreements, as the case may be;
(b) to hold the Trust Estate in trust, to create and administer the
Trust Account, to direct payments received by the Trust to the Trust
Account and to make payments out of the Trust Account as set forth in
Article III hereof;
(c) to issue and sell to the Underwriters an aggregate of up to
645,000 DECS (including those DECS subject to the over-allotment option of
the Underwriters provided for in the Underwriting Agreement) pursuant to
the Underwriting Agreement and as contemplated by the Prospectus; provided,
however, that subsequent to the determination of the public offering price
per DECS and related underwriting discount for the DECS to be sold to the
Underwriters but prior to the sale of the DECS to the Underwriters, the
DECS originally issued to the Sponsor shall be split into a greater number
of DECS, with any fractional shares being rounded down to the nearest
integral number, so that immediately following such split the value of each
DECS held by the Sponsor will equal the aforesaid public offering price;
(d) to select independent public accountants and, subject to the
provisions of Section 8.5 hereof, to engage such independent public
accountants;
(e) to engage legal counsel and, to the extent required by Section 2.7
hereof, to engage professional advisors and pay reasonable compensation
thereto;
(f) to defend any action commenced against the Trustees or the Trust
and to prosecute any action which the Trustees deem necessary to protect
the Trust and the rights and interests of Holders, and to pay the costs
thereof;
7
<PAGE>
(g) to arrange for the bonding of officers and employees of the Trust
as required by Section 17(g) of the Investment Company Act and the rules
and regulations thereunder;
(h) to delegate any and all of its powers and duties hereunder as
contemplated by the Custodian Agreement, the Paying Agent Agreement and the
Administration Agreement, to the extent permitted by applicable law; and
(i) to adopt and amend bylaws, and take any and all such other actions
as necessary or advisable to carry out the purposes of the Trust, subject
to the provisions hereof and applicable law, including, without limitation,
the Investment Company Act.
SECTION 2.6 Portfolio Acquisition. In furtherance of the provisions
---------------------
of Section 2.4 hereof, the Sponsor further specifically authorizes and directs
the Trustees, acting on behalf of the Trust:
(a) to enter into the Contracts with respect to the Shares subject
thereto with the Sellers on the Commencement Date for settlement on the
date or dates provided thereunder and, subject to satisfaction of the
conditions set forth in the Contracts, to pay the Firm Purchase Price and
the Additional Purchase Price, if any, thereunder with the proceeds of the
sale of the DECS, net of underwriting commissions and net of the purchase
price paid for the Treasury Securities as provided in paragraph (b) below;
and, subject to the adjustments and exceptions set forth in the Contracts,
the Contracts shall entitle the Trust to receive from the Sellers on the
Exchange Date the Shares and/or Reported Securities subject thereto (or, if
one or more the Sellers elects the Cash Delivery Option under the
Contracts, the amount in cash specified in such Contracts in respect
thereof) so that the Trust may execute the Exchange with the Holders; and
(b) to purchase for settlement at the Closing Date, and at the Option
Closing Date, as appropriate, with the proceeds of the sale of the DECS,
net of underwriting commissions, U.S. Treasury securities from such brokers
or dealers as the Trustees shall designate in writing to the Administrator
having the terms set forth on Schedule I hereto ("Treasury Securities").
-------------------
SECTION 2.7 Portfolio Administration. In furtherance of the
------------------------
provisions of Section 2.4 hereof, the Sponsor further specifically authorizes
and directs the Trustees:
(a) Determination of Exchange Rate Adjustments. Upon receipt of any
------------------------------------------
notice pursuant to Section 5.4(b) of the Contracts of an event requiring
an adjustment to the Exchange Rate, Exchange Price or Closing Price, or
upon otherwise acquiring knowledge of such an event, to calculate the
required adjustment and furnish notice thereof to the Collateral Agent, the
Sellers and the Administrator, or to request from the Sellers or the
Administrator such further information as may be necessary to calculate or
effect the required adjustment;
(b) Selection of Independent Investment Bank. At such times and for
----------------------------------------
such purposes as provided in the Contracts, to select and retain a
nationally recognized investment banking firm to determine the market value
of any property as provided in the
8
<PAGE>
Contracts, and to deliver to the Sellers notice pursuant to Section 8.1 of
the Contracts identifying the firm proposed to be selected and retained,
and to consult with the Sellers on such selection and retention as provided
in such Section 8.1;
(c) Acceleration. (i) In the event an Acceleration Date shall occur
------------
due to an Event of Default as provided in Article VII of any of the
Contracts, to deliver the notice to the related Seller contemplated in the
last paragraph of Article VII of the Contracts, if applicable, and to
liquidate a proportionate amount of Treasury Securities and distribute the
proceeds thereof pro rata to each of the Holders of the DECS, together with
any shares of Common Stock or other amounts to be distributed to the
Holders of the DECS, in each case in accordance with the Contracts and the
Collateral Agreements; and (ii) in the event the Contracts shall be
accelerated due to an Adjustment Event as described in the proviso
following Section 6.2(C) of the contracts, to liquidate the Treasury
Securities and distribute the proceeds thereof pro rata to each of the
Holders of the DECS, together with any shares of Common Stock or other
amounts to be distributed to the Holders of the DECS, in each case in
accordance with the Contracts and the Collateral Agreements
(d) Determination of Exchange Date Amounts. To calculate, on the
--------------------------------------
Exchange Date under any of the Contracts, the number of Shares (or, if one
or more Sellers elect the Cash Delivery Option under his or her Contract,
the amount in cash) required to be delivered by each of the related Sellers
under Sections 1.1 and 1.3 of such Contracts or, if an Adjustment Event
shall have occurred, the amount of cash required to be delivered by such
Sellers, and the number of Reported Securities permitted to be delivered by
such Sellers in lieu of all or a portion of such cash, all as provided in
Section 6.2 of the Contracts, and to furnish notice of the amounts so
determined to the Collateral Agent and such Sellers;
(e) Distribution of Exchange Consideration. Unless an Event of
--------------------------------------
Default or an Adjustment Event shall have occurred or one or more Sellers
elect the Cash Delivery Option under the Contracts (in which event the cash
received in respect thereof shall be distributed pro rata to the Holders of
the DECS):
(i) Determination of Fractional Shares. To determine, on the
----------------------------------
Exchange Date under any of the Contracts: (a) for each Holder of
DECS, such Holder's pro rata share of the total number of Shares
delivered to the Trust under the Contracts on such Exchange Date; and
(b) the number of fractional Shares allocable to each Holder
(including, in the case of the Depositary, fractional shares allocable
to beneficial owners of Securities who own through Participants) and
in the aggregate;
(ii) Cash for Fractional Shares. To sell, in the principal
--------------------------
market therefor, on such Exchange Date, a number of Shares equal to
the aggregate number of fractional Shares determined pursuant to
clause (i) (b) above, rounded down to the nearest integral number;
and to distribute to the Holders, pro rata in accordance with the
fractional shares to which they would otherwise have been entitled,
the aggregate proceeds of such sale (net of any brokerage or related
expenses); and
9
<PAGE>
(iii) Delivery of Shares. To deliver the remaining Shares
------------------
subject to such Contracts to the Transfer Agent and Registrar on such
Exchange Date, with instructions that such Shares be re-registered and
re-issued as follows: (a) for and in the name of each Holder (other
than the Depositary) who holds DECS in definitive form, if any, the
Transfer Agent and Registrar shall be instructed to issue definitive
certificates representing a number of Shares equal to such Holder's
pro rata share of the total number of Shares delivered to the Trust
under such Contracts, rounded down to the nearest integral number and
the Trustees shall cause the delivery of such re-registered and re-
issued Shares to each respective Holder; and (b) the Transfer Agent
and Registrar shall be instructed to transfer all remaining Shares to
the account of the Custodian held through the Depositary, who shall
then be instructed to transfer and credit such Shares to each
Participant who holds DECS, with each Participant receiving its pro
rata share of the total Shares delivered to the Trust on such Exchange
Date, reduced by the aggregate fractional shares allocable to such
Participant as described in (i) above;
(iv) Distribution of Other Property. To distribute on the
------------------------------
Exchange Date under any of the Contracts to each Holder of DECS such
Holder's pro rata share of the total number or amount of each other
type of property owned by the Trust at the Exchange Date and subject
to such Contracts, rounded to the nearest integral number;
(v) Record Date. The distributions described in this paragraph
-----------
(e) shall be made to Holders of record as of the close of business on
the Business Day preceding the applicable Exchange Date.
SECTION 2.8 Manner of Sales. Any sale of Trust property permitted
---------------
under Section 8.3(c) hereof shall be made through such executing brokers or to
such dealers as the Trustees, seeking best price and execution for the Trust,
shall designate in writing to the Paying Agent, taking into account such factors
as price, commission, size of order, difficulty of execution and brokerage skill
required.
SECTION 2.9 Limitations on Trustees' Powers'. The Trustees are not
-------------------------------
permitted:
(a) to purchase or hold any securities or instruments except for the
Shares, the Contracts, the Treasury Securities, the Temporary Investments
contemplated by Section 3.5 hereof and any Reported Securities, cash or
other property delivered pursuant to the terms of any Contract;
(b) to dispose of the Contracts prior to the Exchange Date thereunder;
(c) to issue any securities or instruments except for the DECS, or to
issue any DECS other than the DECS sold to the Sponsor and the DECS to be
sold pursuant to the Underwriting Agreement;
(d) to make short sales or purchases on margin;
(e) to write put or call options;
10
<PAGE>
(f) to borrow money;
(g) to underwrite securities;
(h) to purchase or sell real estate, commodities or commodities
contracts;
(i) to purchase restricted securities;
(j) to make loans; or
(k) to take any action, or direct or permit the Administrator, the
Paying Agent or the Custodian to take any action, that would vary the
investment of the Holders within the meaning of Treasury Regulation Section
301.7701-4(c), or otherwise take any action or direct or permit any action
to be taken that would or could cause the Trust not to be a "grantor trust"
owned solely by the present and future Holders under the Code.
SECTION 2.10 Legal Title to Trust Property. Legal title to the Trust
-----------------------------
Estate shall be vested at all times in the Trust as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Trust Estate to be vested in a trustee or trustees, in which case legal
title shall be deemed to be vested in the Trustees, a co-trustee and/or a
separate trustee, as the case may be.
SECTION 2.11 Situs of Trust. The Trust shall be located and
--------------
administered in, and all bank accounts of the Trust maintained in, the State of
Delaware or the State of New York. Payments shall be received by the Trust only
in the State of Delaware or the State of New York and payments will be made by
the Trust only from the State of Delaware or the State of New York.
ARTICLE III
ACCOUNTS AND PAYMENTS
SECTION 3.1 The Trust Account. The Trustees shall, upon issuance of
-----------------
the DECS, establish with the Paying Agent an account to be called the "Trust
Account". All moneys received by the Trust or the Trustees in respect of the
Contracts, the Treasury Securities and any Temporary Investments held pursuant
to Section 3.5 hereof, all moneys received from the sale of the DECS to the
Sponsor, and any proceeds from the sale of the DECS to the Underwriters after
the purchase of the Contracts and the Treasury Securities shall be credited to
the Trust Account.
SECTION 3.2 Payment of Fees and Expenses. The Sponsor will pay the
----------------------------
fees and expenses of the Trust incurred in connection with the offering of the
DECS and the costs and expenses incurred in the organization of the Trust.
SECTION 3.3 Distributions to Holders. On or shortly after each
------------------------
Distribution Date (and, if applicable, promptly following the Trust's receipt of
an Additional Distribution) the Trust shall distribute to each Holder of record
at the close of business on the preceding Record Date, at the post office
address of the Holder appearing on the books of the Trust or Paying Agent or by
any other means mutually agreed upon by the Holder and the Trust, an amount
equal
11
<PAGE>
to such Holder's pro rata share of the Quarterly Distribution, (or, as the case
may be, the Additional Distribution) computed as of the close of business on
such Distribution Date.
SECTION 3.4 Segregation. All moneys and other assets deposited or
-----------
received by the Trust or the Trustees hereunder shall be held by them in trust
as part of the Trust Estate until required to be disbursed or otherwise disposed
of in accordance with the provisions of this Trust Agreement, and the Trust or
the Trustees shall handle such moneys and other assets in such manner as shall
constitute the segregation and holding in trust within the meaning of the
Investment Company Act.
SECTION 3.5 Temporary Investments. To the extent necessary to enable
---------------------
the Paying Agent to make the next succeeding Quarterly Distribution, any moneys
deposited with or received by the Trustees in the Trust Account shall be
invested as soon as possible by the Paying Agent in Temporary Investments
maturing no later than the Business Day preceding the next following
Distribution Date. Except as otherwise specifically provided herein or in the
Paying Agent Agreement, the Paying Agent shall not have the power to sell,
transfer or otherwise dispose of any Temporary Investment prior to the maturity
thereof, or to acquire additional Temporary Investments. The Paying Agent shall
hold any Temporary Investment to its maturity and shall apply the proceeds
thereof upon maturity to the payment of the next succeeding Quarterly
Distribution. All such Temporary Investments shall be selected from time to
time by the Trustees or pursuant to standing instructions from the Trustees to
the Administrator, and the Administrator and/or Paying Agent shall have no
liability to the Trust or any Holder or any other Person with respect to any
such Temporary Investment. Any interest or other income received on any moneys
in the Trust Account shall, upon receipt thereof, be deposited into the Trust
Account
ARTICLE IV
REDEMPTION
SECTION 4.1 Redemption. The Trustees shall have no right or
----------
obligation to redeem DECS.
ARTICLE V
ISSUANCE OF CERTIFICATES; REGISTRY; TRANSFER OF DECS
SECTION 5.1 Form of Certificate. Each Certificate evidencing DECS
-------------------
shall be countersigned manually or in facsimile by the Managing Trustee and
countersigned manually by the Paying Agent in substantially the form of Exhibit
A hereto with the blanks appropriately filled in, shall be dated the date of
execution and delivery by the Paying Agent and shall represent a fractional
undivided interest in the Trust, the numerator of which fraction shall be the
number of DECS set forth on the face of such Certificate and the denominator of
which shall be the total number of DECS outstanding at that time. All DECS
shall be issued in registered form and shall be numbered serially.
The DECS delivered to the Underwriters on the Closing Date and on any
settlement date under Section 4(b) of the Underwriting Agreement will be issued
in the form of a
12
<PAGE>
global Certificate or Certificates representing the DECS issued to the
Underwriters, to be delivered to the Depositary by or on behalf of the Trust.
Such Certificate or Certificates shall initially be registered on the books and
records of the Trust in the name of Cede & Co., the nominee of DTC, and no
beneficial owner of such DECS will receive a definitive Certificate representing
such beneficial owner's interest in such DECS, except as provided in the next
paragraph. Unless and until definitive, fully registered Certificates have been
issued pursuant to the next paragraph, the Trust shall be entitled to deal with
the Depositary for all purposes of this Agreement as the Holder and the sole
holder of the Certificates and shall have no obligation to the beneficial owners
thereof, and none of the Trust, the Trustees, or any agent of the Trust or the
Trustees shall have any liability with respect to or responsibility for the
records of the Depositary.
If the Depositary elects to discontinue its services as securities
depository and a successor depositary is not appointed by the Trust within 90
days, then definitive Certificates shall be prepared by the Trust. Upon
surrender of the global Certificate or Certificates accompanied by registration
instructions, the Trustees shall cause definitive Certificates to be delivered
to the beneficial owners in accordance with the instructions of the Depositary.
Neither the Trustees nor the Trust shall be liable for any delay in delivery of
such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions.
Pending the preparation of definitive Certificates, the Trustees may
execute and the Paying Agent shall authenticate and deliver temporary
Certificates (printed, lithographed, typewritten or otherwise reproduced, in
each case in form satisfactory to the Paying Agent). Temporary Certificates
shall be issuable as registered Certificates substantially in the form of the
definitive Certificates but with such omissions, insertions and variations as
may be appropriate for temporary Certificates, all as may be determined by the
Trustees with the concurrence of the Paying Agent. Every temporary Certificate
shall be executed by the Managing Trustee and be authenticated by the Paying
Agent upon the same conditions and in substantially the same manner, and with
like effect, as the definitive Certificates. Without unreasonable delay the
Managing Trustee shall execute and shall furnish definitive Certificates and
thereupon temporary Certificates may be surrendered in exchange therefor without
charge at each office or agency of the Paying Agent and the Paying Agent shall
authenticate and deliver in exchange for such temporary Certificates definitive
Certificates for a like aggregate number of DECS. Until so exchanged, the
temporary Certificates shall be entitled to the same benefits hereunder as
definitive Certificates.
SECTION 5.2 Transfer of DECS; Issuance, Transfer and Exchange of
----------------------------------------------------
Certificates. DECS may be transferred by the Holder thereof by presentation and
- ------------
surrender of properly endorsed Certificates at the office of the Paying Agent,
accompanied by such documents executed by the Holder or his authorized attorney
as the Paying Agent deems necessary to evidence the authority of the person
making the transfer. Certificates issued pursuant to this Trust Agreement are
exchangeable for one or more other Certificates representing an equal aggregate
number of DECS and all Certificates issued as may be requested by the Holder and
deemed appropriate by the Paying Agent shall be issued in denominations of one
DECS or any multiple thereof. The Paying Agent may deem and treat the person in
whose name any DECS shall be registered upon the books of the Paying Agent as
the owner of such DECS for all purposes hereunder and the Paying Agent shall not
be affected by any notice to the
13
<PAGE>
contrary. The transfer books maintained by the Paying Agent for the purposes of
this Section 5.2 hereof shall include the name and address of the record owners
of the DECS and shall be closed in connection with the termination of the Trust
pursuant to Section 8.3 hereof.
A sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any such transfer shall be paid to the Paying
Agent by the Holder. A Holder may be required to pay a fee for each new
Certificate to be issued pursuant to the preceding paragraph in such amount as
may be specified by the Paying Agent and approved by the Trustees.
All Certificates cancelled pursuant to this Trust Agreement may be
voided by the Paying Agent in accordance with the usual practice of the Paying
Agent or in accordance with the instructions of the Trustees; provided, however,
that the Paying Agent shall not be required to destroy cancelled Certificates.
The Paying Agent may adopt other reasonable rules and regulations for
the registration, transfer and tender of DECS as it may, in its discretion, deem
necessary.
SECTION 5.3 Replacement of Certificates. In case any Certificate
---------------------------
shall become mutilated or be destroyed, stolen or lost, the Paying Agent shall
execute and deliver a new Certificate in exchange and substitution therefor upon
the Holder's furnishing the Paying Agent with proper identification and
satisfactory indemnity, complying with such other reasonable regulations and
conditions as the Paying Agent may prescribe and paying such expenses and
charges, including any bonding fee, as the Paying Agent may incur or reasonably
impose; provided that if the Trust has terminated or is in the process of
terminating, the Paying Agent, in lieu of issuing such new Certificate, may,
upon the terms and conditions set forth herein, make the distributions set forth
in Section 8.3(c) hereof. Any mutilated Certificate shall be duly surrendered
and cancelled before any duplicate Certificate shall be issued in exchange and
substitution therefor. Upon issuance of any duplicate Certificate pursuant to
this Section 5.3 hereof, the original Certificate claimed to have been lost,
stolen or destroyed shall become null and void and of no effect, and any
protected purchaser thereof shall have only such rights as are afforded under
Article 8 of the Uniform Commercial Code to a Holder presenting a Certificate
for transfer in the case of an overissue.
SECTION 5.4 Limitation on Liability. Pursuant to Section 3803(a) of
-----------------------
the Act, the Holders of the DECS shall be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.
SECTION 5.5. General Provisions Regarding the DECS.
-------------------------------------
(a) The consideration received by the Trust for the issuance of the
DECS shall constitute a contribution to the capital of the Trust and shall not
constitute a loan to the Trust.
(b) Upon issuance of the DECS as provided in this Trust Agreement,
the DECS so issued shall be deemed to be validly issued, fully paid and non-
assessable.
14
<PAGE>
(c) Every person, by virtue of having become a Holder in accordance
with the terms of this Trust Agreement, shall be deemed to have expressly
assented and agreed to the terms of, and shall be bound by, this Trust
Agreement.
ARTICLE VI
ISSUANCE OF THE CONTRACTS
SECTION 6.1 Execution of the Contracts. The Contracts shall be
--------------------------
countersigned manually or in facsimile by the Managing Trustee and executed
manually by each of the Sellers and shall be dated the date of execution and
delivery by each of the Sellers.
ARTICLE VII
TRUSTEES
SECTION 7.1 Trustees. The Trust shall have three Trustees who shall
--------
initially be elected by the Initial Trustee. One Trustee shall be the Managing
Trustee and, as such, is authorized to execute documents and instruments on
behalf of the Trust. The Managing Trustee will be appointed by resolution of
the Trustees. Each Trustee shall serve until the next regular annual or special
meeting of Holders called for the purpose of electing Trustees and, then, until
such Trustee's successor is duly elected and qualified. Holders may not
cumulate their votes in the election of Trustees. Each Trustee shall not be
considered to have qualified for the office unless such Trustee shall agree to
be bound by the terms of this Trust Agreement and shall evidence his consent by
executing this Trust Agreement or a supplement hereto.
SECTION 7.2 Vacancies. Any vacancy in the office of a Trustee may be
---------
filled in compliance with Sections 10 and 16 of the Investment Company Act by
the vote, within thirty days, of the remaining Trustees; provided that if
required by Section 16 of the Investment Company Act, the Trustees shall
forthwith cause to be held as promptly as possible and in any event within sixty
days (unless the Commission by order shall extend such period) a meeting of
Holders for the purpose of electing Trustees in compliance with Sections 10 and
16 of the Investment Company Act. Until a vacancy in the office of any Trustee
is filled as provided above, the remaining Trustees in office, regardless of
their number, shall have the powers granted to the Trustees and shall discharge
all the duties imposed upon the Trustees by this Trust Agreement. Election
shall be by the affirmative vote of Holders of a majority of the DECS entitled
to vote present in person or by proxy at a special meeting of Holders called for
the purpose of electing any Trustee. Each individual Trustee shall be at least
21 years of age and shall not be under any legal disability. No Trustee who is
an "interested person", as defined in the Investment Company Act, may assume
office if it would cause the composition of the Trustees of the Trust not to be
in compliance with the percentage limitations on interested persons in Section
10 of the Investment Company Act. Trustees need not be Holders. Notice of the
appointment or election of a successor Trustee shall be mailed promptly after
acceptance of such appointment by the successor Trustee to each Holder.
SECTION 7.3 Powers. The Trust will be managed solely by the Trustees,
------
who will, subject to the provisions of Article II hereof, have complete and
exclusive control over the management, conduct and operation of the Trust's
business, and shall have the rights, powers
15
<PAGE>
and authority of a board of directors of a corporation organized under Delaware
law. The Trustees shall have fiduciary responsibility for the safekeeping and
use of all funds and assets of the Trust and shall not employ, or permit another
to employ, such funds or assets in any manner except for the exclusive benefit
of the Trust and except in accordance with the terms of this Trust Agreement.
Subject to the continuing supervision of the Trustees and as permitted by
applicable law, the functions of the Trust shall be performed by the Custodian,
the Paying Agent, the Administrator and such other entities engaged to perform
such functions as the Trustees may determine, including, without limitation, any
or all administrative functions.
SECTION 7.4 Meetings. Meetings of the Trustees shall be held from
--------
time to time upon the call of any Trustee on not less than 48 hours' notice
(which may be waived by any or all of the Trustees in writing either before or
after such meeting or by attendance at the meeting unless the Trustee attends
the meeting for the express purpose of objecting to the transaction of any
business on the ground that the meeting has not been lawfully called or
convened). The Trustees shall act either by majority vote of the Trustees
present at a meeting at which at least a majority of the Trustees then in office
are present or by a unanimous written consent of the Trustees without a meeting.
Except as otherwise required under the Investment Company Act, all or any of the
Trustees may participate in a meeting of the Trustees by means of a conference
telephone call or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
by means of such communications equipment shall constitute presence in person at
such meeting.
SECTION 7.5 Resignation and Removal. Any Trustee may resign and be
-----------------------
discharged of the trust created by the Trust Agreement by executing an
instrument in writing resigning as Trustee, filing the same with the
Administrator and sending notice thereof to the remaining Trustees, and such
resignation shall become effective immediately unless otherwise specified
therein. Any Trustee may be removed in the event of incapacity by vote of the
remaining Trustees and for any reason by written declaration or vote of the
Holders of more than 66 2/3% of the outstanding DECS, notice of which vote shall
be given to the remaining Trustees and the Administrator. The resignation,
removal or failure to reelect any Trustee shall not cause the termination of the
Trust.
SECTION 7.6 Liability. The Trustees shall not be liable to the Trust
---------
or any Holder for any action taken or for refraining from taking any action
except in the case of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties of their office. Specifically, without
limitation, the Trustees shall not be responsible for or in respect of the
recitals herein or the validity or sufficiency of this Trust Agreement or for
the due execution hereof by any other Person, or for or in respect of the
validity or sufficiency of DECS or certificates representing DECS and shall in
no event assume or incur any liability, duty or obligation to any Holder or to
any other Person, other than as expressly provided for herein. The Trustees may
employ agents, attorneys, administrators, accountants and auditors, and shall
not be answerable for the default or misconduct of any such Persons if such
Persons shall have been selected with reasonable care. Action in good faith may
include action taken in good faith in accordance with an opinion of counsel. In
no event shall any Trustee be personally liable for any expenses with respect to
the Trust. Each Trustee shall be indemnified from the Trust Account with
respect to any claim, liability, loss or expense incurred in acting as Trustee
of the Trust, including the costs and expenses of the defense against any such
claim or liability, except in the
16
<PAGE>
case of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties of his office.
SECTION 7.7 Compensation. Each Trustee, other than a Trustee who is a
------------
director, officer or employee of the Sponsor, any Underwriter, or the
Administrator or any affiliate thereof, shall receive a one-time, up-front fee
of $10,800, in respect of its annual fee and anticipated out-of-pocket expenses.
In addition, the Managing Trustee shall receive an additional one-time, up-front
fee of $3,600 for serving in such capacity. The Trustees will not receive any
pension or retirement benefits. In the event of the resignation or removal of a
Trustee, such Trustee shall remit to the Trust the portion of its fee ratable
for the period from the day of such resignation or removal through the Exchange
Date.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Meetings of Holders. The Trustees shall not hold annual
-------------------
or regular meetings of Holders except as set forth herein. A special meeting
may be called at any time by the Trustees or upon petition of Holders of not
less than 51% of the DECS outstanding (unless substantially the same matter was
voted on during the preceding 12 months), and shall be called as provided in
Section 7.2 hereof (or as otherwise required by the Investment Company Act and
the rules and regulations thereunder, including, without limitation, when
requested by the Holders of not less than 10% of the DECS outstanding for the
purposes of voting upon the question of the removal of any Trustee or Trustees).
The Trustees shall establish, and notify the Holders in writing of, the record
date for each such meeting which shall be not less than 10 nor more than 50 days
before the meeting date. Holders at the close of business on the record date
will be entitled to vote at the meeting. The Administrator shall, as soon as
possible after any such record date (or prior to such record date if
appropriate), mail by first class mail to each Holder a notice of meeting and a
proxy statement and form of proxy in the form approved by the Trustees and
complying with the Investment Company Act and the rules and regulations
thereunder. Except as otherwise specified herein or in any provision of the
Investment Company Act and the rules and regulations thereunder, any action may
be taken by vote of Holders of a majority of the DECS outstanding present in
person or by proxy if Holders of a majority of DECS outstanding on the record
date are so represented. Each DECS shall have one vote and may be voted in
person or by duly executed proxy. Any proxy may be revoked by notice in
writing, by a subsequently dated proxy or by voting in person at the meeting,
and no proxy shall be valid after eleven months following the date of its
execution. Any investment company (as defined in Section 3 of the Investment
Company Act) owning DECS in excess of the limits imposed by Sections
12(d)(1)(A)(i) and 12(d)(1)(c) of the Investment Company Act will be required
to vote its DECS in proportion to the votes of all other Holders.
SECTION 8.2 Books and Records; Reports. (a) The Trustees shall keep
--------------------------
a certified copy or duplicate original of this Trust Agreement on file at the
office of the Trust and the office of the Administrator available for inspection
at all reasonable times during its usual business hours by any Holder. The
Trustees shall keep proper books of record and account for all the transactions
under this Trust Agreement at the office of the Trust and the office of the
Administrator, and such books and records shall be open to inspection by any
Holder at all
17
<PAGE>
reasonable times during usual business hours. The Trustees shall retain all
books and records in compliance with Section 31 of the Investment Company Act
and the rules and regulations thereunder.
(b) With each payment to Holders the Paying Agent shall set forth,
either in the instruments by means of which payment is made or in a separate
statement, the amount being paid from the Trust Account expressed as a dollar
amount per DECS and the other information required under Section 19 of the
Investment Company Act and the rules and regulations thereunder. The Trustees
shall prepare and file or distribute reports as required by Section 30 of the
Investment Company Act and the rules and regulations thereunder. The Trustees
shall prepare and file such reports as may from time to time be required to be
filed or distributed to Holders under any applicable state or Federal statute or
rule or regulation thereunder, and shall file such tax returns as may from time
to time be required under any applicable state or Federal statute or rule or
regulation thereunder. One of the Trustees shall be designated by resolution of
the Trustees to make the filings and give the notices required by Rule 17g-1
under the Investment Company Act.
(c) In calculating the net asset value of the Trust as required by
the Investment Company Act, (i) the Treasury Securities shall be valued at the
mean between the last current bid and asked prices or, if quotations are not
available, as determined in good faith by the Trustees, (ii) short-term
investments having a maturity of 60 days or shall be valued at cost with accrued
interest or discount earned included in interest receivable and (iii) the
Contracts shall be valued at the mean of the bid prices received by the
Administrator from at least three independent broker-dealer firms unaffiliated
with the Trust to be named by the Trustees who are in the business of making
bids on financial instruments similar to the Contracts and with terms comparable
thereto. In the event that the Trust (acting through the Administrator) is
unable to obtain valuations from three independent broker-dealer firms, as
required by clause (iii) of the preceding sentence, on a timely basis or without
unreasonable effort or expense, the Contracts shall be valued at the median of
bid prices received from two such broker-dealer firms. In the event that the
Trust (acting through the Administrator) is unable to obtain a valuation for the
Contracts that it believes to be reasonable through the above method, valuation
shall be established at a level deemed to be fair and reflective of the market
value for the Contracts based on all appropriate factors relevant to the value
of the Contracts as set forth in pricing guidelines adopted by the Trustees.
SECTION 8.3 Termination. (a) The Trust created hereby shall
-----------
dissolve, and its affairs be wound up, upon the earliest of (i) the date 90 days
after the execution of this Trust Agreement if (x) the DECS have not theretofore
been issued or (y) the net worth of the Trust is not at least $100,000 at such
time, (ii) the date of the repayment, sale or other disposition, as the case may
be, of all of the Contracts, the Treasury Securities and any other securities
held hereunder, (iii) the date 10 Business Days after the latest Exchange Date
under any of the Contracts (or, if all of the Contracts shall be accelerated
pursuant to Article VII thereof, 10 Business Days after the date on which the
Trust shall receive the Shares, cash or other property then required to be
delivered by each of the Sellers, or the proceeds of any sale of collateral
pursuant to the Collateral Agreements), and (iv) the date which is 21 years less
91 days after the death of the last survivor of all of the descendants of Joseph
P. Kennedy living on the date hereof. The Trust is irrevocable, the Sponsor has
no right to withdraw any assets constituting a
18
<PAGE>
portion of the Trust Estate, and the dissolution of the Sponsor shall not
operate to terminate the Trust. The death or incapacity of any Holder shall not
operate to terminate this Trust Agreement, nor entitle his legal representatives
or heirs to claim an accounting or to take any action or proceeding in any court
for a partition or winding up of the Trust, and shall not otherwise affect the
rights, obligations and liabilities of the parties hereto.
(b) Written notice of any dissolution shall be sent to Holders
specifying the record date for any distribution to Holders and the time of
dissolution as determined by the Trustees, upon which the books maintained by
the Paying Agent pursuant to Section 5.2 hereof shall be closed.
(c) To the extent permitted by applicable law, for purposes of
dissolution under Sections 8.3(a)(ii), (iii) and (iv) hereof, within five
Business Days after such dissolution, the Trustees shall effect the sale of any
remaining property of the Trust, and the Paying Agent shall distribute pro rata
as soon as practicable thereafter to each Holder, upon surrender for
cancellation of its Certificates, its interest in the Trust Estate. Together
with the distribution to the Holders, the Trustees shall furnish the Holders
with a final statement as of the date of the distribution of the amount
distributable with respect to each DECS.
(d) Upon the winding up of the Trust and its dissolution, the
Managing Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Office of the Secretary of State of the
State of Delaware in accordance with the provisions of Section 3810 of the Act.
Upon the dissolution of the Trust, the sale of Trust property and distribution
of the Trust Estate to the Holders, and the filing of the certificate of
cancellation, the Trust shall terminate and this Agreement shall be of no
further force or effect.
SECTION 8.4 Amendment and Waiver. (a) This Trust Agreement, and any
--------------------
of the agreements referred to in Section 2.5(a) hereof, may be amended from time
to time by the Trustees for any purpose prior to the issuance and sale to the
Underwriters of the DECS and thereafter without the consent of any of the
Holders (i) to cure any ambiguity or to correct or supplement any provision
contained herein or therein which may be defective or inconsistent with any
other provision contained herein or therein; (ii) to change any provision hereof
or thereof as may be required by applicable law or the Commission or any
successor governmental agency exercising similar authority; or (iii) to make
such other provisions in regard to matters or questions arising hereunder or
thereunder as shall not materially adversely affect the interests of the Holders
(as determined in good faith by the Trustees, who may rely on an opinion of
counsel).
(b) This Trust Agreement may also be amended from time to time by the
Trustees (or the performance of any of the provisions of the Trust Agreement may
be waived) with the consent by the required vote of the Holders in accordance
with Section 8.1 hereof; provided that this Trust Agreement may not be amended
(i) without the consent by vote of the Holders of all DECS then outstanding, so
as to increase the number of DECS issuable hereunder above the number of DECS
specified in Section 2.5(c) hereof or such lesser number as may be outstanding
at any time during the term of this Trust Agreement, (ii) to reduce the interest
in the Trust represented by DECS without the consent of the Holders of such
DECS, (iii) if such amendment is prohibited by the Investment Company Act or
other applicable law, (iv) without
19
<PAGE>
the consent by vote of the Holders of all DECS then outstanding, if such
amendment would effect a change in the voting requirements set forth in Section
8.1 hereof or this Section 8.4, or (v) without the consent by vote of the
Holders of the lesser of (x) 67% or more of the DECS represented at a special
meeting of Holders, if more than 50% of the DECS outstanding are represented at
such meeting, and (y) more than 50% of the DECS outstanding, if such amendment
would effect a change in Section 2.4 or 2.9 hereof.
(c) Promptly after the execution of any amendment, the Trustees shall
furnish written notification of the substance of such amendment to each Holder.
(d) Notwithstanding subsections (a) and (b) of this Section 8.4, no
amendment hereof shall permit the Trust, the Trustees, the Administrator, the
Paying Agent or the Custodian to take any action or direct or permit any Person
to take any action that (i) would vary the investment of Holders within the
meaning of Treasury Regulation Section 301.7701-4(c), or (ii) would or could
cause the Trust, or direct or permit any action to be taken that would or could
cause the Trust, not to be a "grantor trust" under the Code.
SECTION 8.5 Accountants.
-----------
(a) The Trustees shall, in accordance with Section 30 of the
Investment Company Act, file annually with the Commission such information,
documents and reports as investment companies having securities registered on a
national securities exchange are required to file annually pursuant to Section
13(a) of the Securities Exchange Act of 1934, as amended, and the rules and
regulations issued thereunder. The Trustees shall transmit to the Holders, at
least semi-annually, the reports required by Section 30(d) of the Investment
Company Act and the rules and regulations thereunder, including, without
limitation, a balance sheet accompanied by a statement of the aggregate value of
investments on the date of such balance sheet, a list showing the amounts and
values of such investments owned on the date of such balance sheet, and a
statement of income for the period covered by the report. Financial statements
contained in such annual reports shall be accompanied by a certificate of
independent public accounts based upon an audit not less in scope or procedures
than that which independent public accountants would ordinarily make for the
purpose of presenting comprehensive and dependable financial statements and
shall contain such information as the Commission may prescribe. Each such
report shall state that such independent public accountants have verified
investments owned, either by actual examination or by receipt of a certificate
from the Custodian.
(b) The independent public accountants referred to in subsection (a)
above shall be selected at a meeting held within thirty days before or after the
beginning of the fiscal year by the vote, cast in person, of a majority of the
Trustees who are not "interested persons" as defined in the Investment Company
Act and such selection shall be submitted for ratification at the first meeting
of Holders to be held as set forth in Section 8.1 hereof, and thereafter as
required by the Investment Company Act and the rules and regulations thereunder.
The employment of any independent public accountant for the Trust shall be
conditioned upon the right of the Holders by a vote of the lesser of (i) 67% or
more of the DECS present at a special meeting of Holders, if Holders of more
than 50% of DECS outstanding are present or represented by proxy at such meeting
or (ii) more than 50% of the DECS outstanding to terminate such employment at
any time without penalty.
20
<PAGE>
(c) The foregoing provisions of this Section 8.5 are in addition to
any applicable requirements of the Investment Company Act and the rules and
regulations thereunder.
SECTION 8.6 Nature of Holder's Interest'. Each Holder holds at any
---------------------------
given time a beneficial interest in the Trust Estate, but does not have any
right to take title or possession of any portion of the Trust Estate. Each
Holder expressly waives any right he may have under any rule of law, or the
provisions of any statute, or otherwise, to require the Trustees at any time to
account, in any manner other than as expressly provided in this Trust Agreement,
for the Shares, the Contract, the Treasury Securities or other assets or monies
from time to time received, held and applied by the Trustees hereunder. No
Holder shall have any right except as provided herein to control or determine
the operation and management of the Trust or the obligations of the parties
hereto. Nothing set forth herein or in the certificates representing DECS shall
be construed to constitute the Holders from time to time as partners or members
of an association.
SECTION 8.7 Delaware Law to Govern. This Trust Agreement is executed
----------------------
and delivered in the State of Delaware, and all laws or rules of construction of
the State of Delaware shall govern the rights of the parties hereto and the
Holders and the construction, validity and effect of the provisions hereof.
SECTION 8.8 Notices. Any notice, demand, direction or instruction to
-------
be given to the Sponsor hereunder shall be in writing and shall be duly given if
mailed or delivered to the General Counsel of Salomon Smith Barney Inc., 388
Greenwich Street, New York, New York 10013, Telephone: (212) 816-6000,
Telecopier: (212) 816-8571, Attention: General Counsel. Any notice, demand,
direction or instruction to be given to the Trust and the Trustees hereunder
shall be in writing and shall be duly given if mailed or delivered to the Trust
at c/o Puglisi & Associates, 850 Library Avenue, Suite 204, Newark, Delaware
19715, Telephone: (302) 738-6680, Telecopier: ( 302) 738-7210, Attention: Donald
J. Puglisi and to each Trustee at such Trustee's address set forth beneath its
signature below, or such other address as shall be specified to the other
parties hereto by such party in writing. Any notice to be given to a Holder
shall be duly given if mailed, first class postage prepaid, or by such other
substantially equivalent means as the Trustees may deem appropriate, or
delivered to such Holder at the address of such Holder appearing on the registry
of the Paying Agent.
SECTION 8.9 Severability. If any one or more of the covenants,
------------
agreements, provisions or terms of this Trust Agreement shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
and terms of this Trust Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Trust Agreement or of the
Certificates, or the rights of the Holders thereof.
SECTION 8.10 Counterparts. This Trust Agreement may be executed in
------------
several counterparts, each of which shall be an original and all of which shall
constitute one and the same instrument.
SECTION 8.11 Successors and Assigns. Whenever in this Trust Agreement
----------------------
any of the parties hereto is named or referred to, the successors and assigns of
such party shall be deemed to be included, and all covenants and agreements in
this Trust Agreement by the Sponsor
21
<PAGE>
and Trustees shall bind and inure to the benefit of their respective successors
and assigns, whether or not so expressed.
22
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed.
SPONSOR:
SALOMON SMITH BARNEY INC.
By:
/s/
---------------------------------
TRUSTEES:
Managing Trustee
/s/ Donald J. Puglisi
---------------------------------
Name: Donald J. Puglisi
Address: 850 Library Avenue,
Suite 204
Newark, Delaware 19715
/s/ William R. Latham III
---------------------------------
Name: William R. Latham III
Address: 850 Library Avenue,
Suite 204
Newark, Delaware 19715
/s/ James B. O'Neill
---------------------------------
Name: James B. O'Neill
Address: 850 Library Avenue,
Suite 204
Newark, Delaware 19715
INITIAL SPONSOR:
/s/ Alan Rifkin
---------------------------------
Alan Rifkin
INITIAL TRUSTEE:
/s/ Tyler Dickson
---------------------------------
Tyler Dickson
<PAGE>
Schedule I
TREASURY SECURITIES
All terms specified are for stripped principal or interest components
of U.S. Treasury debt obligations.
Payment Date Aggregate Face Amount, Per
------------ Treasury, Payable at Payment Date
---------------------------------
, 1999
, 1999
, 2000
, 2000
, 2000
, 2000
, 2001
, 2001
, 2001
, 2001
, 2002
, 2002
I-1
<PAGE>
Exhibit A
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York Corporation ("DTC"), to DECS Trust V
or its agent for registration of transfer, exchange, or payment, and any
certificate issued is registered in the name of Cede & Co. (or in such other
name 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. This certificate may be exchanged by an authorized representative of
DTC in whole or in part for securities in definitive form, registered in the
names of such holders as such representative of DTC shall specify, in which
case, a new certificate will be issued in the name of Cede & Co. (or in such
other name as is requested by such authorized representative of DTC)
representing the securities not issued in definitive form.
THIS CERTIFICATE IS ISSUED UNDER AND IS SUBJECT TO THE TERMS,
PROVISIONS AND CONDITIONS OF THE TRUST AGREEMENT REFERRED TO BELOW TO WHICH THE
HOLDER OF THIS CERTIFICATE BY VIRTUE OF THE ACCEPTANCE HEREOF ASSENTS AND IS
BOUND.
$____ DECS
DECS TRUST V
CUSIP NO. ___________
NO. 1 ______________ DECS
THIS CERTIFIES THAT CEDE & CO. IS THE RECORD OWNER OF __________ DECS
OF DECS TRUST V CONSTITUTING FRACTIONAL UNDIVIDED INTERESTS IN DECS TRUST V, A
TRUST CREATED UNDER THE LAWS OF THE STATE OF DELAWARE PURSUANT TO AN AMENDED AND
RESTATED DECLARATION OF TRUST BETWEEN SALOMON SMITH BARNEY INC. AND THE TRUSTEES
NAMED THEREIN. THIS CERTIFICATE IS ISSUED UNDER AND IS SUBJECT TO THE TERMS,
PROVISIONS AND CONDITIONS OF THE TRUST AGREEMENT TO WHICH THE HOLDER OF THIS
CERTIFICATE BY VIRTUE OF THE ACCEPTANCE HEREOF ASSENTS AND IS BOUND, A COPY OF
WHICH TRUST AGREEMENT IS AVAILABLE AT THE OFFICE OF THE TRUST'S ADMINISTRATOR
AND PAYING AGENT, THE BANK OF NEW YORK, 101 BARCLAY STREET, FLOOR 12E, NEW YORK
10286, ATTENTION: BETTY COCOZZA. THIS CERTIFICATE IS TRANSFERABLE AND
EXCHANGEABLE BY THE REGISTERED OWNER IN PERSON OR BY HIS DULY AUTHORIZED
ATTORNEY AT THE OFFICE OF THE PAYING AGENT UPON SURRENDER OF THIS CERTIFICATE
PROPERLY ENDORSED OR ACCOMPANIED BY A WRITTEN INSTRUMENT OF TRANSFER AND ANY
OTHER DOCUMENTS THAT THE PAYING AGENT MAY REQUIRE FOR TRANSFER, IN FORM
SATISFACTORY TO THE PAYING AGENT AND PAYMENT OF THE FEES AND EXPENSES PROVIDED
IN THE TRUST AGREEMENT.
A-1
<PAGE>
THIS CERTIFICATE IS NOT VALID UNLESS MANUALLY COUNTERSIGNED BY THE
PAYING AGENT.
WITNESS THE FACSIMILE SIGNATURE OF THE MANAGING TRUSTEE.
DECS Trust V
DATED:
By
-------------------------------
Managing Trustee
COUNTERSIGNED:
The Bank of New York, as Paying Agent
By:
- -----------------------------
Authorized Signature
A-2
<PAGE>
EXHIBIT(a)(2)(c)
CERTIFICATE OF TRUST OF DECS TRUST V
This Restated Certificate of Trust of DECS Trust V (the "Trust"),
dated August 5, 1999, is being duly executed and filed by Donald J. Puglisi,
William R. Latham III and James B. O'Neill, as trustees, to restate the amended
and restated Certificate of Trust, which was filed on July 14, 1999, with the
Secretary of the State of Delaware under the Delaware Business Trust Act (12
Del. C. (S) 3801, et seq.) (the "Original Certificate of Trust").
The Original Certificate of Trust is hereby restated in its entirety
to read as follows:
1. Name. The name of the business trust formed hereby is DECS
----
Trust V.
2. Registered Office; Registered Agent. The business address of
-----------------------------------
the registered office of the Trust in the State of Delaware is c/o Puglisi &
Associates, 850 Library Avenue, Suite 204, Newark, Delaware 19715. The name of
the Trust's registered agent at such address is Puglisi & Associates.
3. Effective Date. This Certificate of Trust shall be effective
--------------
upon the date and time of filing.
4. The Trust is to be registered under the Investment Company Act
of 1940, as amended, prior to the issuance of beneficial interests in the Trust.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
/s/ Donald J. Puglisi
---------------------------------------
Donald J. Puglisi, Managing Trustee
/s/ William R. Latham III
---------------------------------------
William R. Latham III, Trustee
/s/ James B. O'Neil
---------------------------------------
James B. O'Neill, Trustee
<PAGE>
EXHIBIT (H)
CGSH DRAFT OF 8/3/99
DECS TRUST V
5,000,000 DECS* SM
(Representing Beneficial Interests in Contracts Relating to
Shares of Common Stock, $.01 par value, of Crown Castle International Corp.)
Underwriting Agreement
New York, New York
**, 1999
Salomon Smith Barney Inc.
Goldman, Sachs & Co.
As Representatives of the several Underwriters,
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
DECS Trust V, a statutory business trust organized under the Delaware
Business Trust Act, 12 Del.C. (S) 3801 et seq. (the "Delaware Act"), of the
-- ---- ------------
State of Delaware (such trust and the trustees thereof acting in their
capacities as such being referred to herein as the "Trust"), proposes to issue
-----
and to sell to the several underwriters named in Schedule I hereto (the
"Underwriters"), for whom you (the "Representatives") are acting as
- ------------- ---------------
representatives, an aggregate of 5,000,000 DECS representing shares of
beneficial interest in the Trust (the "Underwritten DECS"). In addition, the
-----------------
Underwriters will have an option to purchase up to 645,000 DECS (the "Option
------
DECS" and, together with the Underwritten DECS, the "DECS") to cover over-
- ---- ----
allotments, if any. The Option DECS and the Underwritten DECS, together with
the ** DECS of the Trust subscribed for by Salomon Smith Barney Inc. ("Salomon
-------
Smith Barney") pursuant to the Subscription Agreement, dated **, 1999, between
- ------------
Salomon Smith Barney and the Trust (the "Subscription DECS"), are referred to
-----------------
herein as the "Securities." The Securities are to be issued under an Amended
----------
and Restated Declaration of Trust, dated as of **, 1999 (the "Trust Agreement"),
---------------
among the initial trustee and initial sponsor of the Trust, trustees of the
Trust (the "Trustees") and Salomon Smith Barney, as sponsor.
--------
The Trust has entered into forward purchase contracts (the
---------
"Contracts") with the persons listed on Schedule II hereto (each a "Seller" and
--------- ------
collectively, the "Sellers"), pursuant to which each Seller has agreed to sell,
-------
and the Trust has agreed to purchase, the number of shares of Common Stock, $.01
par value (the "Shares"), of Crown Castle International Corp. (the "Company")
------ -------
specified therein on **, 2002 (the "Exchange Date") (subject to the Sellers'
-------------
right to extend and accelerate the Exchange Date and to deliver cash with a
value equivalent to the Shares, or other property, as provided in the
Contracts). Each Seller's obligations under its respective Contract will
- ------------------
* Plus an option to purchase from DECS Trust V up to 645,000 additional DECS
to cover over-allotments.
<PAGE>
be secured by a pledge of collateral under a collateral agreement (each a
"Collateral Agreement") among such Seller, the Trust and The Bank of New York
----------
("BoNY"), as collateral agent (in such capacity, the "Collateral Agent").
---- ----------------
In connection with the foregoing, the Company has filed with the
Commission a registration statement, including a related basic prospectus, with
respect to 5,000,000 Shares in respect of the Underwritten DECS, plus an
additional 645,000 Shares in respect of the Option DECS and an additional
Shares in respect of the Subscription DECS, for delivery by the Sellers pursuant
to the Securities, which registration statement is referred to in Section 2(a)
of this Agreement.
To the extent there are no additional Underwriters listed on Schedule
I other than you, the term Representatives as used herein shall mean you, as
Underwriters, and the terms Representatives and Underwriters shall mean either
the singular or plural as the context requires. The use of the neuter in this
Agreement shall include the feminine and masculine wherever appropriate.
Certain terms used herein are defined in Section 23 hereof.
1. Representations and Warranties of the Trust. The Trust represents
-------------------------------------------
and warrants to, and agrees with, each Underwriter as set forth below in this
Section 1.
(a) The Trust meets the requirements for use of Form N-2 under the Act
and has prepared and filed with the Commission (a) a notification on Form N-8A
(the "Notification") of registration of the Trust as an investment company under
------------
the Investment Company Act and (b) a registration statement on Form N-2 (file
numbers 333- 83965 and 811- 09501), including a related preliminary prospectus,
for the registration of the offering and sale of the DECS under the Act. The
Trust may have filed one or more amendments thereto, including the related
preliminary prospectus, each of which has previously been furnished to you. The
Trust will next file with the Commission one of the following: either (1) prior
to the Trust Effective Date of such registration statement, a further amendment
to such registration statement (including the form of final prospectus); or (2)
after the Trust Effective Date of such registration statement, a final
prospectus in accordance with Rules 430A and 497(h). In the case of clause (2),
the Trust has included in such registration statement, as amended at the Trust
Effective Date, all information (other than Rule 430A Information) required by
the Act and the rules thereunder to be included in such registration statement
and the Trust Prospectus. As filed, such amendment and form of final
prospectus, or such final prospectus, shall contain all Rule 430A Information,
together with all other such required information, and, except to the extent the
Representatives shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to you prior to the Execution Time
or, to the extent not completed at the Execution Time, shall contain only such
specific additional information and other changes (beyond that contained in the
latest Preliminary Trust Prospectus) as the Trust has advised you, prior to the
Execution Time, will be included or made therein.
(b) On the Trust Effective Date, the Trust Registration Statement and
the Notification did or will, and when the Trust Prospectus is first filed (if
required) in accordance with Rule 497(h) and on the Closing Date (as defined
herein) and on any date on which Option DECS are purchased, if such date is not
the Closing Date (a "Settlement Date"), the Trust Prospectus (and any
---------------
supplements thereto) will comply in all material respects with the applicable
requirements of the Act, the Exchange Act and the Investment Company Act, and
the respective rules thereunder; on the Trust Effective Date and at the
Execution Time, the Trust Registration Statement did not or will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein not
misleading; and, on the Trust
2
<PAGE>
Effective Date, the Trust Prospectus, if not filed pursuant to Rule 497(h), did
not or will not, and on the date of any filing pursuant to Rule 497(h) and on
the Closing Date and any Settlement Date, the Trust Prospectus (together with
any supplement thereto) will not, include any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(c) No stop order suspending the effectiveness of the Trust
Registration Statement is in effect, no order preventing or suspending the use
of any Preliminary Trust Prospectus has been issued by the Commission, no notice
or order under Section 8(e) of the Investment Company Act has been issued, and
no proceedings for any such purpose are pending before or threatened by the
Commission.
(d) The Trust has been duly created, is validly existing as a business
trust under the Delaware Act, has the power and authority to own or lease, as
the case may be, and to operate its properties and conduct its business as
described in the Trust Prospectus and to enter into and perform its obligations
under this Agreement, the Trust Agreement and each of the Fundamental Documents
(as defined below) and is duly qualified to do business and is in good standing
under the laws of each jurisdiction in which it owns or leases properties or
conducts any business so as to require such qualification other than where the
failure to be so qualified would not have a material adverse effect on the Trust
or its assets. The Trust has no subsidiaries.
(e) The Trust is registered with the Commission as a non-diversified,
closed-end management investment company under the Investment Company Act and no
order of suspension or revocation of such registration has been issued or
proceedings therefor initiated or, to the knowledge of the Trust, threatened by
the Commission. No person is serving or acting as an officer or trustee of the
Trust except in accordance with the provisions of the Investment Company Act.
(f) This Agreement has been duly authorized, executed and delivered by
the Trust.
(g) Each of the Contracts, the Collateral Agreements, the
Administration Agreement between BoNY and the Trust (the "Administration
--------------
Agreement"), the Custodian Agreement between BoNY and the Trust (the "Custodian
- --------- ---------
Agreement"), the Paying Agent Agreement between BoNY and the Trust (the "Paying
- --------- ------
Agent Agreement") and the Fund Indemnity Agreement between Salomon Smith Barney
- ---------------
and the Trust (the "Fund Indemnity Agreement") (the Contracts, the Collateral
------------------------
Agreements, the Administration Agreement, the Custodian Agreement, the Paying
Agent Agreement and the Fund Indemnity Agreement are referred to herein,
collectively, as the "Fundamental Agreements") has been duly authorized,
----------------------
executed and delivered by the Trust and, assuming due authorization, execution
and delivery by the other parties thereto, is a valid and binding agreement of
the Trust, enforceable against the Trust in accordance with its terms except as
such enforceability may be limited by applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally and by general equitable
principles.
(h) The execution and delivery by the Trust of, and the performance by
the Trust of its obligations under, this Agreement and each Fundamental
Agreement (including the issue and sale by the Trust of the DECS as contemplated
by this Agreement) do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach or
violation of, or default under, or give the holder of any indebtedness of the
Trust the right to require the repurchase, redemption or repayment of all or a
portion of such indebtedness under, or result in
3
<PAGE>
the creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Trust pursuant to, any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or other agreement or instrument to
which the Trust is a party or by which it may be bound, or to which any of the
property or assets of the Trust is subject, nor will such action result in any
violation of the provisions of the Trust Agreement or any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having jurisdiction
over the Trust or any of its assets or properties; and no consent, approval,
authorization, order of, or qualification or filing with, any governmental body
or agency, self-regulatory organization or court or other tribunal, whether
foreign or domestic, is required for the execution and delivery by the Trust of
this Agreement or the Fundamental Agreements or the performance by the Trust of
its obligations hereunder and thereunder, except for the filing of a Certificate
of Trust and the filing of one or more Restated Certificates of Trust with the
office of the Secretary of State of the State of Delaware (which filings have
been duly made) and such as have been obtained and as may be required by the
securities or Blue Sky laws of the various states and foreign jurisdictions in
connection with the offer and sale of the DECS by the Underwriters.
(i) The DECS, the Trust Agreement and the Fundamental Agreements
conform in all material respects to the descriptions thereof contained in the
Trust Prospectus.
(j) The Trust Agreement and the Fundamental Agreements comply with all
applicable provisions of the Act, the Exchange Act and the Investment Company
Act, and all approvals of such documents required under the Investment Company
Act by the holders of the Securities and the Trustees have been obtained and are
in full force and effect.
(k) On the Closing Date, as defined below in Section 5, the
Fundamental Agreements will be in full force and effect and the Trust will not
be in default thereunder and, to the knowledge of the Trust, no event will have
occurred which with the passage of time or the giving of notice or both would
constitute a default thereunder. The Trust is not currently in breach of, or in
default under, the Trust Agreement or any other written agreement or instrument
to which it or its property is bound or affected.
(l) All of the outstanding Securities have been duly authorized and
are validly issued, fully paid and nonassessable undivided beneficial interests
in the assets of the Trust, and the form of certificate used to evidence the
Securities is in due and proper form and complies with all provisions of
applicable law.
(m) The DECS have been duly authorized by the Trust for issuance to
the Underwriters pursuant to this Agreement and, when issued and delivered by
the Trust in accordance with the terms of this Agreement and the Trust Agreement
against payment of the purchase price therefor as provided herein, will be
validly issued, fully paid and nonassessable undivided beneficial interests in
the assets of the Trust, and the issuance of such DECS will not be subject to
any preemptive or similar rights. No person has rights to the registration of
any securities because of the filing of the Trust Registration Statement, and no
holder of the Securities will be subject to personal liability by reason of
being such a holder.
(n) The DECS have been approved for listing on the National Market
System of the National Association of Securities Dealers Automated Quotation
System (the "Nasdaq National Market System"), subject to official notice of
issuance. The Trust's Registration Statement on Form 8-A under the Exchange Act
is effective.
4
<PAGE>
(o) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the condition,
financial or otherwise, of the Trust, or in the investment objectives,
investment policies, liabilities, business, prospects or operations of the Trust
from that set forth in the Trust Prospectus (exclusive of any supplements
thereto subsequent to the date of this Agreement) and there have been no
transactions entered into by the Trust which are material to the Trust other
than those in the ordinary course of its business or as described in the Trust
Prospectus (exclusive of any supplements thereto subsequent to the date of this
Agreement).
(p) There are no legal or governmental proceedings pending or, to the
knowledge of the Trust, threatened against or affecting the Trust that are
required to be described in the Trust Registration Statement or the Trust
Prospectus and are not so described or any statutes, regulations, contracts or
other documents that are required to be described in the Trust Registration
Statement or the Trust Prospectus or to be filed as exhibits to the Trust
Registration Statement that are not described or filed as required.
(q) The Trust has all necessary consents, authorizations, approvals,
orders (including exemptive orders), certificates and permits of and from, and
has made all declarations and filings with, all governmental authorities, self-
regulatory organizations and courts and other tribunals, whether foreign or
domestic, to own and use its assets and to conduct its business in the manner
described in the Trust Prospectus, except to the extent that the failure to
obtain or file the foregoing would not have a material adverse effect on the
Trust and except such as may be required by the securities or Blue Sky laws of
the various states in connection with the offer and sale of the DECS.
(r) There are no material restrictions, limitations or regulations
with respect to the ability of the Trust to invest its assets as described in
the Trust Prospectus, other than as described therein.
(s) The Trust has good title to all properties owned by it, in each
case, free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind except such as (a) are
described in the Trust Prospectus or (b) do not, singly or in the aggregate,
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Trust.
(t) There are no legal or governmental proceedings pending to which
the Trust is a party or of which any property of the Trust is the subject which,
if determined adversely to the Trust, would individually or in the aggregate
have a material adverse effect on the current or future financial position or
results of operations of the Trust; and, to the best of the Trust's knowledge,
no such proceedings are threatened or contemplated by governmental authorities
or threatened by others.
(u) The statement of assets, liabilities and capital included in the
Trust Registration Statement and the Trust Prospectus, together with the notes
thereto, present fairly the financial position of the Trust at the date
indicated, and such financial statement has been prepared in conformity with
generally accepted accounting principles.
(v) The accountants who certified the financial statements and
supporting schedules included in the Trust Registration Statement are
independent public accountants as required by the Act and the rules and
regulations of the Commission thereunder.
5
<PAGE>
(w) The Trust has not taken and will not take, directly or indirectly,
any action designed to or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the DECS or the Shares, and has not effected
any sales of the Company's common stock which, if effected by the Company, would
be required to be disclosed in response to Item 701 of Regulation S-K.
2. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to, and agrees with, each Underwriter as set forth below
in this Section 2.
(a) The Company meets the requirements for use of Form S-3 under the
Act, meets the requirements for an offering of securities on a delayed basis
under Rule 415 and has prepared and filed with the Commission a registration
statement (file number 333- 83395) on Form S-3, including a related preliminary
prospectus and a related basic prospectus, for the registration under the Act of
the Shares in connection with the offering and sale of the DECS. The Company
may have filed one or more amendments thereto, including the related preliminary
prospectuses and the related basic prospectus, each of which has previously been
furnished to you. The Company will next file with the Commission one of the
following: either (1) prior to the Company Effective Date of such registration
statement, a further amendment to such registration statement, (including the
final forms of such prospectuses), (2) after the Company Effective Date of such
registration statement, such final prospectuses in accordance with Rules 430A
and 424(b), or (3) a final prospectus in accordance with Rules 415 and 424(b).
In the case of clause (2), the Company has included in such registration
statement, as amended at the Company Effective Date, all information (other than
Rule 430A Information) required by the Act and the rules thereunder to be
included in such registration statement and the Company Prospectus with respect
to the Shares and the offering thereof. As filed, such amendment and form of
final prospectuses, or such final prospectuses, shall contain all Rule 430A
Information, together with all other such required information with respect to
the Shares and the offering thereof and, except to the extent the
Representatives shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to you prior to the Execution Time
or, to the extent not completed at the Execution Time, shall contain only such
specific additional information and other changes (beyond that contained in the
latest Preliminary Company Prospectus) as the Company has advised you, prior to
the Execution Time, will be included or made therein. If the Company
Registration Statement contains the undertaking specified by Regulation S-K Item
512(a), the Company Registration Statement, at the Execution Time, meets the
requirements set forth in Rule 415(a)(1)(x).
(b) On the Company Effective Date, the Company Registration Statement
did or will, and when the Company Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Closing Date (as defined herein) and on
any Settlement Date, the Company Prospectus (and any supplements thereto) will,
comply in all material respects with the applicable requirements of the Act and
the respective rules thereunder; on the Company Effective Date and at the
Execution Time, the Company Registration Statement did not or will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading; and, on the Company Effective Date, the Company
Prospectus, if not filed pursuant to Rule 424(b), did not or will not, and on
the date of any filing pursuant to Rule 424(b) and on the Closing Date and any
Settlement Date, the Company Prospectus (together with any supplement thereto)
will not, include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided, however,
-------- -------
that the Company makes no
6
<PAGE>
representations or warranties as to the information contained in or omitted from
the Company Registration Statement, or the Company Prospectus (or any supplement
thereto) in reliance upon and in conformity with information furnished herein or
in writing to the Company by or on behalf of any Underwriter through the
Representatives specifically for inclusion in the Company Registration Statement
or the Company Prospectus (or any supplement thereto).
(c) No stop order suspending the effectiveness of the Company
Registration Statement is in effect, no order preventing or suspending the use
of any Preliminary Company Prospectus has been issued by the Commission, and no
proceedings for any such purpose are pending before or threatened by the
Commission. Each document incorporated by reference in the Company Registration
Statement or the Company Prospectus, when they were filed or are filed with the
Commission, conformed or will conform in all material respects to the
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder, and none of such documents contained or will contain an untrue
statement of a material fact or omitted or will omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
(d) The Company is not and, after giving effect to the sale of the
sale of the Shares, will not be an "investment company" as defined in the
Investment Company Act.
(e) Neither the Company nor any of its subsidiaries has taken and none
of such entities will take, directly or indirectly, any action designed to or
which has constituted or which might reasonably be expected to cause or result,
under the Exchange Act or otherwise, in the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
DECS.
(f) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included in the
Company Prospectus any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Company Prospectus; and,
since the respective dates as of which information is given in the Company
Registration Statement and the Company Prospectus, there has not been any change
in the capital stock or long-term debt of the Company or any of its subsidiaries
or any material adverse change, or any development involving a prospective
material adverse change, except such as are described in the Company Prospectus
or such as would not be reasonably expected, in the aggregate, to result in a
material adverse effect on the condition (financial or other), business,
prospects, properties or results of operations of the Company and its
"significant subsidiaries" as defined in Rule 405 of the rules and regulations
of the Commission promulgated under the Act, taken as a whole ("Material Adverse
Effect");
(g) The Company and its subsidiaries have good and marketable title to
all real property and good and marketable title to all personal property owned
by them, in each case free and clear of all liens, encumbrances and defects
except such as are described in the Company Prospectus; and any real property
and buildings held under lease by the Company and its subsidiaries are held by
them under valid, subsisting and enforceable leases with such exceptions as
would not be reasonably expected, in the aggregate, to result in a Material
Adverse Effect;
7
<PAGE>
(h) The Company is a corporation duly incorporated and validly
existing and in good standing under the laws of the State of Delaware with all
requisite corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Company Prospectus, and is duly
registered and qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
so to register or qualify or to be in good standing would not have a Material
Adverse Effect; and each subsidiary of the Company has been duly incorporated
and is validly existing as a corporation (or in the case of each of Crown
Atlantic Holdings, Crown Atlantic Sub and Crown Atlantic Holding, LLC, as a
limited liability company) in good standing under the laws of its jurisdiction
of incorporation;
(i) None of the subsidiaries of the Company (other than Crown
Communication, Inc. ("CCI"), Castle Transmission Services (Holdings) Ltd.
("CTSH"), Castle Transmission International, Ltd. ("CTI"), Crown Castle
Investment Corp. ("CC Investment"), Crown Castle Investment Corp. (II) ("CC
Investment II"), CCA Investment Corp. ("CCAIC"), Crown Atlantic Holding Company
LLC ("Crown Atlantic Holdings"), Crown Atlantic Holding Sub LLC ("Crown Atlantic
Sub") and Crown Atlantic Company LLC ("Crown Atlantic") (each, a "Significant
-----------
Subsidiary" and collectively, the "Significant Subsidiaries") is a "significant
- ---------- ------------------------
subsidiary," as such term is defined in Rule 405 of the rules and regulations
under the Act;
(j) The Company has an authorized capitalization as set forth in the
Company Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and non-
assessable and conform to the description thereof contained in the Company
Prospectus; and all of the issued shares of capital stock of each subsidiary of
the Company have been duly and validly authorized and issued, are fully paid and
non-assessable and (except for directors' qualifying shares and except as set
forth in the Company Prospectus) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims, except
as set forth in the Company Prospectus;
(k) The consummation of the transactions herein contemplated will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or (with the giving of notice or the lapse of time or both)
constitute a default under, (A) any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the Company or any of its
subsidiaries is subject, (B) the provisions of the Organizational Documents of
the Company or any of its subsidiaries or (C) any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their properties or assets
except in the cases of clause (A) or (C), such breaches, violations or defaults
that in the aggregate would not have a Material Adverse Effect; and no consent,
approval, authorization, order, registration or qualification of or with any
such court or governmental agency or body is required for the issue and sale of
the Shares or the consummation by the Company of the transactions contemplated
by this Agreement, except (A) the registration under the Act of the Shares and
(B) such consents, approvals, authorizations, registrations or qualifications as
(1) may be required under the Exchange Act and applicable state or foreign
securities laws in connection with the purchase and distribution of the Shares
by the Underwriters and the International Underwriters,
8
<PAGE>
(2) as may have already been obtained or made and (3) the failure to obtain or
make would not, individually or in the aggregate, have a Material Adverse
Effect;
(l) Neither the Company nor any of its subsidiaries (A) is in
violation of its Organizational Documents, (B) is in default in any material
respect, and no event has occurred which, with notice or lapse of time or both,
would constitute such a default, in the due performance or observance of any
term, covenant or condition contained in any material indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which it is a party
or by which it is bound or to which any of its properties or assets is subject
or (C) is in violation in any material respect of any law, ordinance,
governmental rule, regulation or court decree to which it or its property or
assets may be subject or has failed to obtain any material license, permit,
certificate, franchise or other governmental authorization or permit necessary
to the ownership of its property or to the conduct of its business, except for,
in the cases of clause (B) or (C), such defaults, violations or failures to
obtain that in the aggregate would not have a Material Adverse Effect;
(m) The statements set forth in the Company Prospectus under the
caption "Description of Capital Stock", insofar as they purport to constitute a
summary of the terms of the capital stock of the Company, under the caption
"Certain US Income Tax Considerations for Non-U.S. Holders" and under the
caption "Plan of Distribution", insofar as they purport to describe the
provisions of the laws and documents referred to therein, are accurate, complete
and fair;
(n) Other than as set forth in the Company Prospectus, there are no
legal or governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of its
subsidiaries is the subject which, if determined adversely to the Company or any
of its subsidiaries, would individually or in the aggregate have a Material
Adverse Effect; and, to the best of the Company's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or threatened by
others;
(o) KPMG Peat Marwick LLP, who have certified certain financial
statements of the Company and its subsidiaries and of certain other business
operations to be acquired by the Company and its subsidiaries, are independent
public accountants as required by the Act and the rules and regulations of the
Commission thereunder;
(p) The Company has reviewed its operations and that of its
subsidiaries and is in the process of reviewing any third parties with which the
Company or any of its subsidiaries has a material relationship to evaluate the
extent to which the business or operations of the Company or any of its
subsidiaries will be affected by the Year 2000 Problem. As a result of such
review, the Company has no reason to believe, and does not believe, that the
Year 2000 Problem will have a Material Adverse Effect. The "Year 2000 Problem"
as used herein means any significant risk that computer hardware or software
used in the receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of mechanical or
electrical systems of any kind will not, in the case of dates or time periods
occurring after December 31, 1999, function at least as effectively as in the
case of dates or time periods occurring prior to January 1, 2000;
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<PAGE>
(q) This Agreement has been duly authorized, executed and delivered by
the Company and, assuming due authorization, execution and delivery by the
Underwriters, constitutes the valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms (subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other similar laws affecting creditors' rights generally from time
to time in effect and to general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether in a proceeding in equity or at law);
(r) The consolidated historical and pro forma financial statements,
together with the related notes thereto filed as part of the Company
Registration Statement or included in the Company Prospectus comply as to form
in all material respects with the requirements of Regulation S-X under the Act
applicable to registration statements on Form S-3 under the Act. Such
historical financial statements fairly present the financial position of the
Company at the respective dates indicated and the results of operations and cash
flows for the respective periods indicated, in each case in accordance with
generally accepted accounting principles ("GAAP") consistently applied
throughout such periods. Such pro forma financial statements have been prepared
on a basis consistent with such historical statements, except for the pro forma
adjustments specified therein, and give effect to assumptions made on a
reasonable basis and in good faith and present fairly the pro forma position,
results of operations and the other information purported to be shown therein at
the respective dates or the respective periods therein specified. The other
financial and statistical information and data filed as part of the Company
Registration Statement or included in the Company Prospectus, historical and pro
forma, are, in all material respects, fairly presented and prepared on a basis
consistent with such financial statements and the books and records of the
Company;
(s) The Company and each of the Significant Subsidiaries has such
permits, licenses, franchises, certificates of need and other approvals or
authorizations of any governmental or regulatory authority ("Permits"),
including, without limitation, any permits required by the Federal
Communications Commission ("FCC"), the Federal Aviation Administration ("FAA")
or the Office of Telecommunications ("OFTEL"), as are necessary under applicable
law to own their respective properties and to conduct their respective
businesses in the manner described in the Company Prospectus, except to the
extent that the failure to have such Permits would not have a Material Adverse
Effect. The Company and the Significant Subsidiaries have fulfilled and
performed, in all material respects, all their respective obligations with
respect to the Permits, and no event has occurred which allows, or after notice
or lapse of time would allow, revocation or termination thereof or results in
any other material impairment of the rights of the holder of any such Permit,
subject in each case to such qualification as may be set forth in the Company
Prospectus and except to the extent that any such revocation or termination
would not have a Material Adverse Effect. Except as described in the Company
Prospectus, none of the Permits contains any restriction that has not previously
been satisfied and that is materially burdensome to the Company or any of the
Significant Subsidiaries;
(t) For each existing tower of the Company not yet registered with the
FCC where registration will be required, the FCC's grant of an application for
registration of such tower will not have a significant environmental effect as
defined under Section 1.1307(a) of the FCC's rules;
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(u) The consummation of the transactions contemplated by this
Agreement shall not cause any third party to have any rights of first refusal
with respect to the acquisition of towers under any agreement filed as an
exhibit to, or incorporated by reference in, the Company Registration Statement
(the "Material Agreements") that has not already been described in the Company
Prospectus as to which the Company and any of the Significant Subsidiaries or
any of their property or assets may be subject;
(v) The Company and each of the Significant Subsidiaries owns or
possesses all patents, trademarks, trademark registration, service marks,
service mark registrations, trade names, copyrights, licenses, inventions, trade
secrets and rights described in the Company Prospectus as being owned by any of
them or necessary for the conduct of their respective businesses, and neither
the Company nor any of the Significant Subsidiaries is aware of any claim to the
contrary or any challenge by any other person to the rights of the Company or
any of the Significant Subsidiaries with respect to such rights that, if
determined adversely to the Company or any such Significant Subsidiary, would in
the aggregate have a Material Adverse Effect;
(w) The descriptions in the Company Prospectus of all agreements,
contracts, indentures, leases or other instruments are accurate in all material
respects and fairly present the information purported to be described therein;
(x) Neither the Company nor any of its subsidiaries is involved in any
strike, job action or labor dispute with any group of employees, and, to the
knowledge of the Company and the Subsidiaries, no such action or dispute is
threatened;
(y) The Company and each of its subsidiaries are in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"); no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company would have any liability; the Company has not
incurred and does not expect to incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "pension plan" or (ii)
Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including
the regulations and published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company would have any liability that is intended
to be qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification;
(z) The Company and each of its subsidiaries have filed all federal,
state and local income and franchise tax returns required to be filed through
the date hereof and have paid all taxes due thereon, and no tax deficiency has
been determined adversely to the Company or any of its subsidiaries nor does the
Company or any of its subsidiaries have any knowledge of any tax deficiency
which, if determined adversely to the Company or any of its subsidiaries, would
have a Material Adverse Effect;
(aa) Since the date as of which information is given in the Company
Prospectus through the date hereof, and except as may otherwise be disclosed in
the Company
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<PAGE>
Registration Statement, the Company has not (i) issued or granted any
securities, (ii) incurred any liability or obligation, direct or contingent, or
entered into any transaction, in each case not in the ordinary course of
business which is material to the Company and its subsidiaries taken as a whole
or (iii) declared or paid any dividend on its capital stock (excluding payment
in lieu of fractional shares upon conversion of certain senior preferred
convertible stock of the Company);
(bb) The Company (i) makes and keeps accurate books and records and
(ii) maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (A) transactions are executed in accordance with
management's authorization, (B) transactions are recorded as necessary to permit
preparation of its financial statements in conformity with GAAP and to maintain
accountability for assets, (C) access to its assets is permitted only in
accordance with management's general or specific authorization and (D) the
reported accountability for its assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences;
(cc) Neither the Company nor any of its subsidiaries, nor any
director, officer, agent, employee or other person associated with or acting on
behalf of the Company or any of its subsidiaries, has used any corporate funds
for any unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; made any direct or indirect unlawful payment to
any foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977; or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment;
(dd) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, medical
wastes, hazardous wastes or hazardous substances by the Company or any of its
subsidiaries (or, to the knowledge of the Company, any of their predecessors in
interest) at, upon or from any of the property now or previously owned or leased
by the Company or any of its subsidiaries in violation of any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit or which would
require remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or remedial action
which would not have, or could not be reasonably likely to have, singularly or
in the aggregate, a Material Adverse Effect; there has been no material spill,
discharge, leak, emission, injection, escape, dumping or release of any kind
onto such property or into the environment surrounding such property of any
toxic wastes, medical wastes, solid wastes, hazardous wastes or hazardous
substances due to or caused by the Company or any of its subsidiaries or with
respect to which the Company or any of its subsidiaries has knowledge, except
for any such spill, discharge, leak, emission, injection, escape, dumping or
release which would not have or would not be reasonably likely to have,
singularly or in the aggregate, a Material Adverse Effect; and the terms
"hazardous wastes," "toxic wastes," "hazardous substances" and "medical wastes"
shall have the meanings specified in any applicable local, state, federal and
foreign laws or regulations with respect to environmental protection; and
(ee) The Company and each of the Significant Subsidiaries carry, or
are covered by, insurance in such amounts and covering such risks as is adequate
for the conduct of its businesses and the value of its properties and as is
customary for companies engaged in similar businesses in similar industries.
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<PAGE>
3. Representations and Warranties of the Sellers. Each of the
---------------------------------------------
Sellers, severally and jointly, represents and warrants to, and agrees with,
each Underwriter, the Company and the Trust that:
(a) Each of the Sellers is validly existing as a corporation or
limited liability company, as the case may be, in good standing under the laws
of the State of Delaware, with full power and authority to own its property, and
does not conduct any business in any jurisdiction, own any material property
other than Shares or have any subsidiaries.
(c) Each Seller has full right, power and authority to enter into and
perform its obligations under this Agreement, the Contract and Collateral
Agreement to which such Seller is a party and the letter agreement among each of
the Sellers, Salomon Smith Barney and Goldman Sachs relating to expenses of the
Trust (the "Reimbursement Agreement").
-----------------------
(d) This Agreement has been duly authorized, executed and delivered by
each Seller. Each Contract and Collateral Agreement to which each Seller is a
party and the Reimbursement Agreement have been duly authorized, executed and
delivered by such Seller and, assuming due authorization, execution and delivery
by the other parties thereto, is a valid and binding agreement of such Seller,
enforceable against such Seller in accordance with its terms.
(e) The execution and delivery by each Seller of this Agreement, each
Contract and Collateral Agreement to which such Seller is a party and the
Reimbursement Agreement, the performance by such Seller of its obligations
hereunder and thereunder and the consummation of the transactions herein and
therein contemplated do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with, result in a breach or
violation of or imposition of any lien (other than pursuant to each Collateral
Agreement to which such Seller is a party), charge or encumbrance upon any
property or assets of such Seller pursuant to (i) the Organizational Documents
of such Seller, (ii) the terms of any indenture, contract, lease, mortgage, deed
of trust, note agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which such Seller is a party or bound or to
which its property is subject, or (iii) any statute, law, rule, regulation,
judgment, order or decree applicable to such Seller of any court, regulatory
body, administrative agency, governmental body, arbitrator or other authority
having jurisdiction over such Seller or any of its properties. Amounts received
by each of the Sellers, if any, at the Closing Date and, if any Option DECS are
purchased, at the time of delivery thereof pursuant to Section 4(b), pursuant to
such Seller's Contract will not be used by such Seller for the purpose, whether
immediate, incidental or ultimate, of buying or carrying a margin stock, as such
terms are defined in Regulation G promulgated by the Board of Governors of the
Federal Reserve System.
(f) Each of the Sellers is not and, after giving effect to the
transactions contemplated in each Contract and Collateral Agreement and the
offering and sale of the DECS contemplated by this Agreement, will not be an
"investment company" or an entity "controlled" by an "investment company" as
such terms are defined in the Investment Company Act.
(g) Each of the Sellers is the sole registered owner of and has, and
on the Closing Date (and, if any Option DECS are purchased, at the time of
delivery thereof pursuant to Section 4(b)) will have, good and valid title to
the Shares to be pledged and assigned by it under its Collateral Agreement, free
and clear of any security interests, claims, liens, equities and other
encumbrances, except for those created pursuant to its Collateral Agreement; and
such Seller has the full right,
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<PAGE>
power and authority, and all authorization and approval required by law to
pledge and assign the Shares to be pledged and assigned by such Seller pursuant
to its Collateral Agreement.
(h) Title to any Shares to be delivered by a Seller pursuant to such
Seller's Contract on the Exchange Date, assuming payment of the consideration
due pursuant to such Seller's Contract on the Closing Date, will pass to the
Trust free and clear of any security interests, claims, liens, equities and
other encumbrances. The sale, transfer and delivery of any Shares to be
delivered by a Seller pursuant to such Seller's Contract is not, and at the time
of delivery of such Shares will not be, subject to any right of first refusal or
similar rights of any person pursuant to any contract to which such Seller or
any shareholder of such Seller is a party or by which any of them is bound.
(i) Each of the Sellers hereby repeats and confirms as if set forth in
full herein each of the representations, warranties, guarantees and agreements
made by such Seller in each Contract and Collateral Agreement to which such
Seller is a party and agrees that the representations, warranties, guarantees
and agreements therein and herein are made hereby for the benefit of, and may be
relied upon by, (i) the Underwriters and Cleary, Gottlieb, Steen & Hamilton,
counsel to the Underwriters and (ii) the Company and Cravath, Swaine & Moore,
counsel to the Company.
(j) None of the Sellers has taken or will take, directly or
indirectly, any action which is designed to or which has constituted or which
might reasonably be expected to cause or result, under the Exchange Act or
otherwise, in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares or the DECS.
(k) Each Seller is familiar with the Company Registration Statement
and the Company Prospectus and verifies that the information set forth therein
respecting it is true and complete.
(l) No consent, approval, license, authorization, order or validation
of, and no filing, recording, or registration with, any court or governmental
authority, agency or body is required for the compliance by each Seller with all
of the provisions of this Agreement, each Contract and Collateral Agreement to
which such Seller is a party and the Reimbursement Agreement, except such as
have been obtained under the Act and such as may be required under the blue sky
laws in connection with the purchase and distribution of the DECS by the
Underwriters and the distribution of the Shares pursuant to the terms of the
DECS in the manner contemplated in this Agreement and in the Trust Prospectus
and the Company Prospectus.
(m) Certificates in negotiable form for each Seller's Shares have been
placed in custody, for delivery pursuant to the terms of such Seller's Contract
and Collateral Agreement, under a Custody Agreement duly authorized, executed
and delivered by such Seller, in the form heretofore furnished to you (the
"Custody Agreement") with the Bank of New York, as Custodian (the "Custodian");
- ------------------ ---------
the Shares represented by the certificates so held in custody for each Seller
are subject to the interests of the Trust pursuant to such Seller's Contract and
Collateral Agreement; the arrangements for custody and delivery of such
certificates, made by such Seller pursuant to such Seller's Contract and
Collateral Agreement and the Custody Agreement, are not subject to termination
by any acts of such Seller, or by operation of law, whether by the death or
incapacity of such Seller or the occurrence of any other event; and if any such
death, incapacity or any other such event shall occur before the delivery of
such Shares pursuant to such Seller's Contract and Collateral Agreement,
certificates for the Shares will be delivered by the Custodian in accordance
with the terms and conditions of such Seller's Contract and Collateral Agreement
and the Custody Agreement
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<PAGE>
as if such death, incapacity or other event had not occurred, regardless of
whether or not the Custodian shall have received notice of such death,
incapacity or other event.
(n) Each of the Sellers has no reason to believe that the
representations and warranties of the Company contained in Section 2 hereof are
not true and correct, is familiar with the Company Registration Statement and
has no knowledge of any material fact, condition or information not disclosed in
the Company Prospectus or any supplement thereto which has adversely affected or
may adversely affect the business of the Company or any of its subsidiaries; and
the sale of Shares by such Seller pursuant hereto is not prompted by any
information concerning the Company or any of its subsidiaries which is not set
forth in the Company Prospectus or any supplement thereto.
Any certificate signed by or on behalf of any Seller, and delivered to
the Representatives or counsel for the Underwriters in connection with the
offering of the Securities shall be deemed a representation and warranty by such
Seller as to matters covered thereby, to each Underwriter.
4. Purchase and Sale.
-----------------
(a) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Trust agrees to sell to
each Underwriter, and each Underwriter agrees, severally and not jointly, to
purchase from the Trust, at a purchase price of $** per DECS, the amount of the
Underwritten DECS set forth opposite such Underwriter's name in Schedule I
hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Trust hereby grants an
option to the several Underwriters to purchase, severally and not jointly, up to
645,000 Option DECS at the same purchase price per DECS as the Underwriters
shall pay for the Underwritten DECS. The option may be exercised only to cover
over-allotments in the sale of the Underwritten DECS by the Underwriters. The
option may be exercised in whole or in part at any time (but not more than once)
on or before the 30th day after the date of the Trust Prospectus upon written or
facsimile notice by the Representatives to the Trust setting forth the number of
Option DECS as to which the several Underwriters are exercising the option and
the Settlement Date. Delivery of certificates for the Option DECS by the Trust,
and payment therefor to the Trust, shall be made as provided in Section 5
hereof. The number of Option DECS to be purchased by each Underwriter shall be
the same percentage of the total number of Option DECS to be purchased by the
several Underwriters as such Underwriter is purchasing of the Underwritten DECS,
subject to such adjustments as you in your absolute discretion shall make to
eliminate any fractional DECS.
(c) As compensation to the Underwriters for their commitment
hereunder, and in view of the fact that the proceeds of the sale of the DECS
will be used by the Trust as specified in the Contracts, the Sellers agree,
severally and jointly, to pay to Salomon Smith Barney, at the time of each
delivery of DECS pursuant to Section 5, an amount equal to $0. ** per DECS being
delivered at such time, plus $0. ** per DECS for each Subscription DECS owned by
Salomon Smith Barney after giving effect to the subdivision of the Subscription
DECS provided for in the Subscription Agreement.
5. Delivery and Payment. Delivery of and payment for the
--------------------
Underwritten DECS and the Option DECS (if the option provided for in Section
4(b) hereof shall have been exercised on
15
<PAGE>
or before the first Business Day prior to the Closing Date) shall be made at
10:00 A.M., New York City time, on **, 1999, or at such time on such later date
not later than five Business Days after the foregoing date as the
Representatives shall designate, which date and time may be postponed by
agreement among the Representatives, the Trust and the Sellers or as provided in
Section 14 hereof (such date and time of delivery and payment for the DECS being
herein called the "Closing Date"). Delivery of the DECS shall be made to the
------------
Representatives for the respective accounts of the several Underwriters against
payment by the several Underwriters through the Representatives of the purchase
price thereof to or upon the order of the Trust by wire transfer payable in
immediately available same-day funds to an account specified by the Trust in
writing at least two Business Days in advance of the Closing Date. Delivery of
the DECS shall be made through the facilities of the Depository Trust Company
unless the Representatives shall otherwise instruct.
The Trust agrees to have the DECS available for inspection and
checking by the Representatives in New York, New York, not later than 1:00 P.M.
on the Business Day prior to the Closing Date.
If the option provided for in Section 4(b) hereof is exercised after
the first Business Day prior to the Closing Date, the Trust will deliver the
Option DECS (at the expense of the Trust) to the Representatives on the date
specified by the Representatives (which shall be within three Business Days
after exercise of said option) for the respective accounts of the several
Underwriters, against payment by the several Underwriters through the
Representatives of the purchase price thereof to or upon the order of the Trust
by wire transfer payable in immediately available same-day funds to an account
specified by the Trust in writing at least two Business Days in advance of such
Settlement Date. If settlement for the Option DECS occurs after the Closing
Date, the Trust, the Company and the Sellers will deliver to the Representatives
on the Settlement Date for the Option DECS, and the obligation of the
Underwriters to purchase the Option DECS shall be conditioned upon receipt of,
supplemental opinions, certificates and letters confirming as of such date the
opinions, certificates and letters delivered on the Closing Date pursuant to
Section 10 hereof.
6. Offering by the Underwriters. It is understood that the several
----------------------------
Underwriters propose to offer the DECS for sale to the public as set forth in
the Trust Prospectus.
7. Agreements of the Trust. The Trust agrees with the several
-----------------------
Underwriters that:
(a) The Trust will use its best efforts to cause the Trust
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the
offering of the DECS, the Trust will not file any amendment of the Trust
Registration Statement or supplement to the Trust Prospectus or any Rule
462(b) Trust Registration Statement unless the Trust has furnished you a
copy for your review prior to filing and will not file any such proposed
amendment or supplement to which you object. Subject to the foregoing
sentence, if the Trust Registration Statement has become or becomes
effective pursuant to Rule 430A, or filing of the Trust Prospectus is
otherwise required under Rule 424(b), the Trust will cause the Trust
Prospectus, properly completed, and any supplement thereto to be filed with
the Commission pursuant to the applicable paragraph of Rule 424(b) within
the time period prescribed and will provide evidence satisfactory to the
Representatives of such timely filing. The Trust will promptly advise the
Representatives (1) when the Trust Registration Statement, if not effective
at the Execution Time, shall have become effective, (2) when the Trust
Prospectus, and any supplement thereto, shall have been
16
<PAGE>
filed (if required) with the Commission pursuant to Rule 424(b) or when any
Rule 462(b) Trust Registration Statement shall have been filed with the
Commission, (3) when, prior to termination of the offering of the DECS, any
amendment to the Trust Registration Statement or any Rule 462(b) Trust
Registration Statement, shall have been filed or become effective, (4) of
any request by the Commission or its staff for any amendment of the Trust
Registration Statement, or any Rule 462(b) Trust Registration Statement, or
for any supplement to the Trust Prospectus or for any additional
information, (5) of the issuance by the Commission of any stop order
suspending the effectiveness of the Trust Registration Statement or the
institution or threatening of any proceeding for that purpose and (6) of
the receipt by the Trust of any notification with respect to the suspension
of the qualification of the DECS for sale in any jurisdiction or the
institution or threatening of any proceeding for such purpose. The Trust
will use its best efforts to prevent the issuance of any such stop order or
the suspension of any such qualification and, if issued, to obtain as soon
as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the DECS is required
to be delivered under the Act, any event occurs as a result of which the
Trust Prospectus as then supplemented would include any untrue statement of
a material fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which they were
made not misleading, or if it shall be necessary to amend the Trust
Registration Statement or supplement the Trust Prospectus to comply with
the Act or the Exchange Act or the respective rules thereunder, the Trust
promptly will (1) notify the Representatives of any such event, (2) prepare
and file with the Commission, subject to the second sentence of paragraph
(a) of this Section 7, an amendment or supplement which will correct such
statement or omission or effect such compliance and (3) supply any
supplemental Trust Prospectus to you in such quantities as you may
reasonably request.
(c) The Trust will furnish to the Representatives and counsel for the
Underwriters, without charge, signed copies of the Trust Registration
Statement (including exhibits thereto) and to each other Underwriter a copy
of the Trust Registration Statement (without exhibits thereto). The Trust
will furnish to the Representatives and counsel for the Underwriters,
without charge, copies of the Trust Registration Statement (including
exhibits thereto). The Trust will furnish to the Underwriters not later
than (i) 6:00 P.M., New York City time, on the date of determination of the
public offering price of the DECS, if such determination occurred at or
prior to 12:00 noon, New York City time, on such date or (ii) 6:00 P.M.,
New York City time, on the Business Day following the date on which the
public offering price was determined, if such determination occurred after
12:00 noon, New York City time, on such date, as many copies of each
Preliminary Trust Prospectus, the Trust Prospectus and any supplement
thereto as the Representatives may reasonably request; further, so long as
delivery of a prospectus by an Underwriter or any dealer may be required by
the Act, as many copies of each Preliminary Trust Prospectus and the Trust
Prospectus and any supplement thereto as the Representatives may reasonably
request.
(d) The Trust will arrange, if necessary, for the qualification of the
DECS and the Shares for sale under the laws of such jurisdictions as the
Representatives may designate, will maintain such qualifications in effect
so long as required for the distribution of the DECS and will pay any fee
of the National Association of Securities Dealers, Inc. (the "NASD"), in
----
connection with its review, if any, of the Trust Registration Statement and
the offering of the DECS.
17
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8. Agreements of the Company. The Company agrees with the several
-------------------------
Underwriters that:
(a) The Company will use its best efforts to cause the Company
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the
offering of the DECS, the Company will not file any amendment of the
Company Registration Statement or supplement to the Company Prospectus or
any Rule 462(b) Company Registration Statement unless the Company has
furnished to you a copy for your review prior to filing and will not file
any such proposed amendment or supplement to which you reasonably object.
Subject to the foregoing sentence, if the Company Registration Statement
has become or becomes effective pursuant to Rule 430A, or filing of the
Company Prospectus is otherwise required under Rule 424(b), the Company
will cause the Company Prospectus, properly completed, and any supplement
thereto to be filed with the Commission pursuant to the applicable
paragraph of Rule 424(b) within the time period prescribed and will provide
evidence satisfactory to the Representatives of such timely filing. The
Company will promptly advise the Representatives (1) when the Company
Registration Statement, if not effective at the Execution Time, shall have
become effective, (2) when the Company Prospectus, and any supplement
thereto, shall have been filed (if required) with the Commission pursuant
to Rule 424(b) or when any Rule 462(b) Company Registration Statement shall
have been filed with the Commission, (3) when, prior to termination of the
offering of the DECS, any amendment to the Company Registration Statement
shall have been filed or become effective, (4) of any request by the
Commission or its staff for any amendment of the Company Registration
Statement, or any Rule 462(b) Company Registration Statement, or for any
supplement to the Company Prospectus or for any additional information, (5)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Company Registration Statement or the institution or
threatening of any proceeding for that purpose and (6) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or the institution
or threatening of any proceeding for such purpose. The Company will use
its best efforts to prevent the issuance of any such stop order or the
suspension of any such qualification and, if issued, to obtain as soon as
possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Shares is
required to be delivered under the Act (including in respect of the
offering and sale of the DECS), any event occurs as a result of which the
Company Prospectus as then supplemented would include any untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which they were
made not misleading, or if it shall be necessary to amend the Company
Registration Statement or supplement the Company Prospectus to comply with
the Act or the Exchange Act or the respective rules thereunder, the Company
promptly will (1) notify the Representatives of such event, (2) prepare and
file with the Commission, subject to the second sentence of paragraph (a)
of this Section 8, an amendment or supplement which will correct such
statement or omission or effect such compliance and (3) supply any
supplemented Company Prospectus to you in such quantities as you may
reasonably request.
(c) As soon as practicable, the Company will make generally available
to its security holders and to the Representatives an earnings statement or
statements of the
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Company and its subsidiaries which will satisfy the provisions of Section
11(a) of the Act and Rule 158 under the Act.
(d) The Company will furnish to the Representatives and counsel for
the Underwriters, without charge, signed copies of the Company Registration
Statement (including exhibits thereto) and to each other Underwriter a copy
of the Company Registration Statement (without exhibits thereto). The
Company will furnish to the Underwriters not later than (A) 6:00 P.M., New
York City time, on the date of determination of the public offering price
of the DECS, if such determination occurred at or prior to 12:00 noon, New
York City time, on such date or (B) 6:00 P.M., New York City time, on the
Business Day following the date on which the public offering price of the
DECS was determined, if such determination occurred after 12:00 noon, New
York City time, on such date, as many copies of each Preliminary Company
Prospectus, the Company Prospectus and any supplement thereto as the
Representatives may reasonably request; further, so long as delivery of a
prospectus by any Underwriter or any dealer may be required by the Act
(including in respect of the offering and sale of the DECS), as many copies
of each Preliminary Company Prospectus and the Company Prospectus and any
supplement thereto as the Representatives may reasonably request. The
Company will pay the expenses of printing or other production of the
Company Registration Statement, each Preliminary Company Prospectus and the
Company Prospectus.
(e) The Company will cooperate with the Trust for purposes of the
qualification of the DECS and the Shares for sale under the laws of such
jurisdictions as the Representatives may designate, will maintain such
qualifications in effect so long as required for the distribution of the
DECS or the Shares and will pay any fee of the NASD in connection with its
review, if any, of the Company Registration Statement and the offering of
the Shares in connection with the offering of the DECS; provided that in no
event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action that
would subject it to service of process in suits, in each case, other than
those arising out of the offering or sale of the DECS or the offering and
sale of the Shares in connection with the offering of the DECS in any
jurisdiction where it is not now so subject.
(f) The Company will not, without the prior written consent of Salomon
Smith Barney, during the period of 45 days following the Execution Time,
(i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase or otherwise transfer or dispose of, directly or
indirectly, or announce the offering of any shares of any class of common
stock of the Company or any securities convertible into or exercisable or
exchangeable for shares of any class of common stock of the Company
(whether such shares or any such securities are now owned or hereafter
acquired) or (ii) enter into any swap or other arrangement that transfers
to another, in whole or in part, any of the economic consequences of
ownership of shares of any class of the common stock of the Company,
whether any such transaction described in clause (i) or (ii) above is to be
settled by delivery of shares of any class of common stock of the Company
or such other securities, in cash or otherwise; provided, however, that the
Company may issue, or grant options for, shares of any class of common
stock of the Company pursuant to any stock plan for employees or directors,
or any employee benefit plan, of the Company in effect at the Execution
Time, or pursuant to any stock options outstanding at the Execution Time.
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(g) The Company will furnish the Trust in sufficient quantities for
transmission to holders of the DECS the Company's annual report to
shareholders and reports on Forms 10-K and 10-Q as soon as practicable
after such reports are required to be filed with the Commission.
(h) The Company will take such actions as may be reasonably necessary
to comply with the rules and regulations of the Nasdaq National Market
System in respect of the offering of the Shares contemplated hereby.
(i) The Company will not become an "investment company" as defined in
the Investment Company Act.
(j) Neither the Company nor any of its subsidiaries has taken and none
of such entities will take, any action designed to or which has constituted
or which might reasonably be expected to cause or result, under the
Exchange Act or otherwise, in the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of
the DECS or the Shares.
9. Agreements of the Sellers. Each Seller agrees with each of the
-------------------------
Underwriters that:
(a) Each Seller will not, without the prior written consent of Salomon
Smith Barney, during the period of 45 days following the Execution Time,
(i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase or otherwise transfer or dispose of, directly or
indirectly, or announce the offering of any shares of any class of common
stock of the Company or any securities convertible into or exercisable or
exchangeable for shares of any class of common stock of the Company
(whether such shares or any such securities are now owned or hereafter
acquired) or (ii) enter into any swap or other arrangement that transfers
to another, in whole or in part, any of the economic consequences of
ownership of Shares of any class of the common stock of the Company,
whether any such transaction described in clause (i) or (ii) above is to be
settled by delivery of Shares of any class of common stock of the Company
or such other securities, in cash or otherwise; provided, however, that the
Seller may engage in any of the transactions described in clause (i) or
(ii) above in connection with the offering by the Trust of the DECS or any
delivery of Shares pursuant to the terms of the DECS.
(b) No Seller will take any action designed to or which has
constituted or which might reasonably be expected to cause or result, under
the Exchange Act or otherwise, in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of
the DECS or the Shares, it being understood that this sentence shall not
apply to any share repurchase program conducted by the Company in
compliance with the Exchange Act and all other applicable law.
(c) Each Seller will advise you promptly, and if requested by you,
will confirm such advice in writing, so long as delivery of a prospectus
relating to the Shares (including with respect to the offering and sale of
the DECS) by an underwriter or dealer may be required under the Act, of any
change in the information in the Company Registration Statement or the
Company Prospectus relating to such Seller.
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10. Conditions to the Obligations of the Underwriters. The
-------------------------------------------------
obligations of the Underwriters to purchase the Underwritten DECS and the Option
DECS, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Trust, the Company and the
Sellers contained herein as of the Execution Time, the Closing Date and any
Settlement Date pursuant to Section 4(b) hereof, to the accuracy of the
statements of the Trust, the Company and the Sellers, made in any certificates
pursuant to the provisions hereof, to the performance by each of the Trust, the
Company and the Sellers of their respective obligations hereunder and to the
following additional conditions:
(a) If the Trust Registration Statement or the Company Registration
Statement has not become effective prior to the Execution Time, unless the
Representatives agree in writing to a later time, such Trust Registration
Statement or Company Registration Statement will become effective not later
than (i) 6:00 P.M. New York City time on the date of determination of the
public offering price of the DECS, if such determination occurred at or
prior to 3:00 P.M. New York City time on such date or (ii) 9:30 A.M. New
York City time on the Business Day following the day on which the public
offering price of the DECS was determined, if such determination occurred
after 3:00 P.M. New York City time on such date; if filing of the Trust
Prospectus or the Company Prospectus, or any supplement thereto, is
required pursuant to Rule 497(h) or Rule 424(b), such Trust Prospectus or
Company Prospectus, and any such supplement, will be filed in the manner
and within the time period required by such Rule; and no stop order
suspending the effectiveness of the Trust Registration Statement or the
Company Registration Statement shall have been issued and no proceedings
for that purpose shall have been instituted or threatened.
(b) The Representatives shall have received the opinion of Richards,
Layton & Finger, special Delaware counsel for the Trust, dated the Closing
Date and addressed to the Representatives, with respect to such matters as
the Representatives may reasonably request.
(c) The Company shall instruct Cravath, Swaine & Moore, counsel for
the Company, to furnish, and such counsel shall have furnished, an opinion
to the Representatives dated the Closing Date and addressed to the
Representatives, to the effect that:
(i) each of the Company, CCI, CC Investment, CC Investment II,
CCAIC, Crown Atlantic Holdings, Crown Atlantic Sub and Crown Atlantic
is a corporation validly existing and in good standing under the laws
of the state of its incorporation or formation (which opinion may be
based solely on a certificate of the Secretary of State of such
state), and has all requisite corporate power and authority to own,
lease and operate its properties and to conduct its business as
described in the Company Prospectus. Each of the Company, CCI, CC
Investment, CC Investment II, CCAIC, Crown Atlantic Holdings, Crown
Atlantic Sub and Crown Atlantic is duly registered and qualified to
conduct its business and is in good standing (which opinion may be
based solely on a certificate of the Secretary of State of such
state), in each jurisdiction or place where, based on a certificate of
an officer of the Company, the nature of its properties or the conduct
of its business requires such registration or qualification, except
where the failure so to register or qualify or to be in good standing
would not have a Material Adverse Effect;
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(ii) the Company has an authorized capitalization as set forth in
the Company Prospectus, and all of the issued shares of capital stock
of the Company and the Shares conform to the description thereof
contained in the Company Prospectus; the Shares are duly approved for
listing through the Nasdaq National Market System; and the
certificates for the Shares are in valid and sufficient form;
(iii) except as described in the Company Prospectus, there are
no preemptive or other rights to subscribe for or to purchase, nor any
restriction upon the voting or transfer of, the Shares pursuant to the
Company's Organizational Documents or applicable law or any agreement
or other instrument known to such counsel;
(iv) to the knowledge of such counsel, there are no agreements,
contracts, indentures, leases or other instruments to which any of the
Company or any of the Significant Subsidiaries is a party or to which
any of their respective properties or assets is subject that are
required to be described in, or filed as exhibits to, the Company
Registration Statement and the Company Prospectus that have not been
so described or filed;
(v) the Company Registration Statement was declared effective
under the Act as of the date and time specified in such opinion, the
Company Prospectus was filed with the Commission pursuant to the
subparagraph of Rule 424(b) specified in such opinion on the date
specified therein within the period required by such Rule and no stop
order suspending the effectiveness of the Company Registration
Statement has been issued and, to the knowledge of such counsel, no
proceeding for that purpose is pending or threatened by the
Commission;
(vi) the Company Registration Statement and the Company
Prospectus and any further amendments and supplements thereto made by
the Company prior to the date of such opinion (other than the
financial statements and related schedules therein, as to which such
counsel need express no opinion) comply as to form in all material
respects with the requirements of the Act and the rules and
regulations thereunder;
(vii) the statements contained (A) in the Company Prospectus
under the captions "Description of Capital Stock," "Certain United
States Federal Tax Consequences to Non-United States Holders" and
"Plan of Distribution" and (B) in the Company Registration Statement
in Items 14 and 15, in each case insofar as they are descriptions of
contracts, agreements or other legal documents, or refer to statements
of law or legal conclusions, are accurate in all material respects and
present fairly the information purported to be described therein;
(viii) This Agreement has been duly and validly authorized,
executed and delivered by the Company;
(ix) None of the issuance, offer or sale of the Shares, the
execution, delivery or performance by the Company of this Agreement or
compliance by the
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Company with the provisions hereof (i) requires any consent, approval,
authorization or other order of, or registration or filing with, any
court, regulatory body, administrative agency or other governmental
body, agency or official, or conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, the
Organizational Documents of the Company or the Significant
Subsidiaries or (ii) conflicts or will conflict with or constitutes or
will constitute a breach of, or a default under, any Material
Agreement or violates or will violate any law, rule or regulation of
the United States, or the State of New York or the General Corporation
Law of the State of Delaware, or, to such counsel's knowledge, any
order or decree of any court or government agency or instrumentality
or will result in the creation or imposition of any lien, mortgage,
security interest, pledge, charge, or encumbrance of any kind upon any
property or assets of the Company, CCI, CC Investment, CC Investment
II, CCAIC, Crown Atlantic Holdings, Crown Atlantic Sub or Crown
Atlantic pursuant to the terms of any agreement or instrument to which
any of them is a party or by which any of them may be bound or under
any to which any of their respective property or assets is subject,
except in each case such breaches, conflicts or defaults that,
individually or in the aggregate, would not have a Material Adverse
Effect. For purposes of the foregoing opinion, such counsel may assume
that any agreements referred to in clause (ii) above that are governed
by laws other than the laws of the State of New York, are governed by
and would be interpreted in accordance with the laws of the State of
New York;
(x) the Company is not an "investment company" within the meaning
of the Investment Company Act of 1940, as amended; and
(xi) neither the Company nor any of its subsidiaries is in
violation of its Organizational Documents or in default in the
performance or observance of any material obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which
it is a party or by which it or any of its properties may be bound.
In addition, such counsel shall also state that such counsel has
participated in conferences with officers of the Company and with the
independent public accountants for the Company, concerning the preparation of
the Company Registration Statement and the Company Prospectus, and, although
such counsel has made certain inquiries and investigations in connection with
the preparation of the Company Registration Statement and the Company
Prospectus, it is not passing upon and does not assume any responsibility for
the accuracy or completeness of the statements contained in the Company
Registration Statement and the Company Prospectus, and has not made any
independent check or verification thereof, except insofar as such statements
relate to such counsel and to clause (vii) above, and on the basis of the
foregoing such counsel's work in connection with this matter did not disclose
any information that gave such counsel reason to believe that on the Company
Effective Date or at the Execution Time the Company Registration Statement
contains or contained any untrue statement of a material fact or omitted or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Company Prospectus, as of
its date and on the Closing Date includes any untrue statement of a material
fact or omitted or omits to state a
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material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need express no belief or opinion with respect to the
financial statements and other financial data included therein);
The opinion of such counsel may be limited to the laws of the State of New
York, the General Corporation Law of the State of Delaware and the Federal laws
of the United States;
(d) The Company shall instruct E. Blake Hawk, general counsel for the
Company, to furnish, and such counsel shall have furnished, an opinion to
the Representatives dated the Closing Date and addressed to the
Representatives, to the effect that:
(i) all of the issued shares of capital stock of the Company and
each of its subsidiaries other than CTSH and CTI have been duly and
validly authorized and issued and are fully paid, non-assessable and
(except for directors' qualifying shares) the issued shares of capital
stock of each of the subsidiaries of the Company are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims, except as set forth in the Company Registration
Statement (including the exhibits thereto) with respect to shares
subject to liens under the Company's revolving credit facility with
KeyBank National Association and PNC Bank, National Association;
(ii) to the knowledge of such counsel, there are no legal or
governmental proceedings pending or threatened against the Company or
any of its subsidiaries (other than CTSH and CTI), or to which any of
their respective properties is subject, that are not disclosed in the
Company Prospectus and which are required to be disclosed and
reasonably likely to have a Material Adverse Effect or to materially
affect the consummation of the transactions contemplated by this
Agreement; and
(iii) to the knowledge of such counsel, there are no contracts,
agreements or understandings between the Company or any of its
subsidiaries (other than CTSH and CTI) and any person granting such
person the right to require the Company or any of such subsidiaries
(1) except as described in the Company Prospectus, to file a
registration statement under the Act with respect to any securities of
the Company owned or to be owned by such person or (2) to require the
Company or any of such subsidiaries to include any securities of the
Company owned or to be owned by such person in the securities
registered pursuant to the Company Registration Statement or (3)
except as described in the Company Prospectus, to require the Company
or any of such subsidiaries to include any securities of the Company
owned or to be owned by such person in any securities being registered
pursuant to any other registration statement filed by the Company or
any of such subsidiaries under the Act;
The opinion of such counsel may be limited to the laws of the State of
Texas, the General Corporation Law of the State of Delaware and the Federal laws
of the United States;
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(e) The Company shall have caused Norton Rose, English counsel for CTSH and
CTI, to furnish, and such counsel shall have furnished, an opinion to the
Representatives dated the Closing Date and addressed to the Representatives, to
the effect that:
(i) CTI was duly incorporated on 9 May 1996 under the Companies Act
1985 as a private limited company; CTSH was duly incorporated on 27
August 1996 as a private limited company; a certificate of good
standing in respect of each of the Companies issued by the Companies
Registration Office on a date within three business days of the date of
this opinion is attached;
(ii) by a Certificate of Incorporation on Change of Name issued on
21 March 1997 CTI changed its name to "Castle Transmission
International Ltd."; by a Certificate of Incorporation on Change of
Name issued on 25 February 1997, CTSH changed its name to "Castle
Transmission Services (Holdings) Ltd."; and
(iii) CTI is empowered by its Memorandum of Association to conduct
its business as described in the Company Registration Statement and the
Company Prospectus;
(f) The Sellers shall instruct Kirkpatrick & Lockhart LLP, counsel for
such Sellers, to furnish, and such counsel shall have furnished, an opinion
to the Representatives dated the Closing Date and addressed to the
Representatives, to the effect that:
(i) each of the Sellers has been duly organized and is validly
existing as a corporation or limited liability company, as the case
may be, in good standing under the laws of the State of Delaware with
full power and authority to own or lease, as the case may be, and to
operate its properties and conduct its business, and is duly qualified
to do business and is in good standing under the laws of each
jurisdiction which requires such qualification;
(ii) the Custody Agreement has been duly authorized, executed and
delivered by the Sellers, the Custody Agreement is valid and binding
on the Sellers and each Seller has full legal right and authority to
sell, pledge, transfer and deliver in the manner provided in the
Contracts and Collateral Agreements and the Custody Agreement, the
Shares to be sold, pledged, transferred and delivered thereunder;
(iii) this Agreement has been duly authorized by each of the
Sellers and duly executed and delivered by each of the Sellers; each
Contract and Collateral Agreement to which each Seller is a party and
the Reimbursement Agreement has been duly authorized by such Seller
and duly executed and delivered by such Seller and, assuming due
authorization, execution and delivery by the other parties thereto,
constitutes a valid and legally binding agreement of such Seller,
enforceable against such Seller in accordance with its terms, subject,
as to enforcement of remedies, to bankruptcy, insolvency and other
similar laws affecting creditors' rights generally, and to general
equitable principles; and the execution and delivery by each of the
Sellers of this Agreement, each Contract and Collateral Agreement to
which such Seller is a party and the Reimbursement Agreement, the
performance by such Seller of its obligations hereunder and thereunder
and the consummation of the transactions herein and therein
contemplated do not and will not, whether with or without the
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giving of notice or passage of time or both, conflict with, result in
a breach or violation of or imposition of any lien (other than
pursuant to the Collateral Agreement to which such Seller is a party),
charge or encumbrance upon any property or assets of such Seller
pursuant to (i) the Organizational Documents of such Seller, (ii) the
terms of any indenture or material agreement or instrument to which
such Seller is a party or bound, (iii) any judgment, order or decree
applicable to such Seller or any of its subsidiaries of any court,
regulatory body, administrative agency, governmental body, arbitrator
or other authority having jurisdiction over such Seller or (iv) any
law;
(iv) no consent, approval, license, authorization, order or
validation of, and no filing, recording, or registration with, any
court or governmental authority, agency or body is required for the
compliance by each Seller with all of the provisions of this
Agreement, each Contract and Collateral Agreement to which such Seller
is a party and the Reimbursement Agreement, except such as have been
obtained under the Act and such as may be required under the blue sky
laws in connection with the purchase and distribution of the DECS by
the Underwriters and the distribution of the Shares pursuant to the
terms of the DECS in the manner contemplated in this Agreement and in
the Trust Prospectus and the Company Prospectus;
(v) none of the Sellers is or, after giving effect to the
transactions contemplated in each Contract and Collateral Agreement
and the offering and sale of the DECS as contemplated by this
Agreement, will be an "investment company" or an entity "controlled"
by an "investment company" as such terms are defined in the Investment
Company Act;
(vi) the enforceability of this Agreement, each Custody
Agreement, the Reimbursement, each Contract and each Collateral
Agreement will not be adversely affected by the death or legal
incapacity of any shareholder, or any holder of limited liability
company interests, of any Seller.
(vii) each of the Collateral Agreements creates a valid security
interest in favor of the Collateral Agent (as defined therein) for the
benefit of the Trust in the Shares pledged thereunder as security for
the performance by the applicable Seller of its obligations under the
Contract to which such Seller is a party and to secure the observance
and performance of the covenants and agreements of the applicable
Seller contained in the Contract and the Collateral Agreement to which
such Seller is a party;
(viii) the perfection and the effect of perfection or non-
perfection of the security interest of the Trust in the Shares pledged
pursuant to the Contracts and the Collateral Agreements will be
governed by the laws of the State of New York, assuming the Share
certificates are located in New York at all times.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State
of Delaware, or the Federal laws of the United States, to the extent they
deem proper and specified in such opinion, upon the opinion of other
counsel of good standing whom they believe to be reliable and who are
satisfactory to
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counsel for the Underwriters and (B) as to matters of fact,
to the extent they deem proper, on certificates of responsible officers of
the Company and public officials. References to the Company Prospectus in
this paragraph (d) include any supplements thereto at the Closing Date.
(g) The Representatives shall have received (i) from Cleary, Gottlieb,
Steen & Hamilton, counsel for the Underwriters and the Trust, such opinion
or opinions, dated the Closing Date and addressed to the Representatives,
with respect to the issuance and sale of the DECS, the Trust Registration
Statement, the Trust Prospectus (together with any supplement thereto), the
Fundamental Documents and other related matters as the Representatives may
reasonably require, and (ii) from Latham & Watkins, counsel for the
Underwriters, such opinion or opinions, dated the Closing Date and
addressed to the Representatives, with respect to the Shares, the Company
Registration Statement, the Company Prospectus (together with any
supplement thereto) and other related matters as the Representatives may
reasonably require; and the Company and the Sellers shall have furnished to
such counsel such documents as they reasonably request for the purpose of
enabling them to pass upon such matters.
(h) The Trust shall have furnished to the Representatives a
certificate of the Trust, signed by the Managing Trustee and dated the
Closing Date, to the effect that:
(i) the representations and warranties of the Trust in this
Agreement are true and correct in all material respects on and as of
the Closing Date with the same effect as if made on the Closing Date
and the Trust has complied in all material respects with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date; and
(ii) no stop order suspending the effectiveness of the Trust
Registration Statement or the use of the Trust Prospectus has been
issued and no proceedings for that purpose have been instituted or, to
the Trust's knowledge, threatened.
(i) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the [Chairman of the Board or the
President] and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Company Registration Statement, the
Company Prospectus, any supplements to the Company Prospectus and this
Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct on and as of the Closing Date with the
same effect as if made on the Closing Date and the Company has
complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the Company
Registration Statement or the use of the Company Prospectus has been
issued and no proceedings for that purpose have been instituted or, to
the Company's knowledge, threatened; and
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(iii) since the date of the most recent financial statements
included in the Company Prospectus (exclusive of any supplement
thereto), there has been no material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties
of the Company and its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Company Prospectus (exclusive
of any supplement thereto).
(j) Each of the Sellers shall have furnished to the Representatives a
certificate, signed by [two appropriate officers of] such Seller dated the
Closing Date, to the effect that [each] signer of such certificate has
carefully examined the Company Registration Statement, the Company
Prospectus, any supplements to the Company Prospectus and this Agreement
and that the representations and warranties of such Seller in this
Agreement are true and correct on and as of the Closing Date with the same
effect as if made on the Closing Date and such Seller has complied with all
the agreements and satisfied all the conditions on its part to be performed
or satisfied at or prior to the Closing Date.
(k) At the Execution Time and at the Closing Date, KPMG Peat Marwick
shall have furnished to the Representatives letters, dated respectively as
of the Execution Time and as of the Closing Date, in form and substance
satisfactory to the Representatives, confirming that they are independent
accountants within the meaning of the Act and the Exchange Act and the
respective applicable published rules and regulations thereunder and
stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included or incorporated in the Company
Registration Statement and the Company Prospectus and reported on by
them comply as to form with the applicable accounting requirements of
the Act and the Exchange Act and the related published rules and
regulations adopted by the Commission;
(ii) on the basis of a reading of the latest unaudited financial
statements made available by the Company and its subsidiaries;
carrying out certain specified procedures (but not an examination in
accordance with generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of the
meetings of the stockholders, directors and committees of the Company
and its subsidiaries; and inquiries of certain officials of the
Company who have responsibility for financial and accounting matters
of the Company and its subsidiaries as to transactions and events
subsequent to December 31, 1998 nothing came to their attention which
caused them to believe that:
(A) (1) any unaudited financial statements included or
incorporated by reference in the Company Registration Statement
and the Company Prospectus do not comply as to form with
applicable accounting requirements of the Act and with the
related rules and regulations adopted by the Commission with
respect to financial statements included or incorporated by
reference in quarterly reports on form 10-Q under the Exchange
Act; and said unaudited financial statements are not in
conformity with generally accepted accounting principles applied
on a basis substantially consistent with
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<PAGE>
that of the audited financial statements included in the Company
Registration Statement and the Company Prospectus;
(2) with respect to the period subsequent to December 31,
1998 there were any material changes, at a specified date not
more than three business days prior to the date of the letter, in
[appropriate references to come] as compared with the amounts
shown on the December 31, 1998, consolidated balance sheet
included or incorporated in the Company Registration Statement
and the Company Prospectus, or for the period from December 31,
1998 to such specified date there were any decreases, as compared
with the corresponding period in the preceding year, in
[appropriate references to come], except in all instances for
changes or decreases set forth in such letter, in which case the
letter shall be accompanied by an explanation by the Company as
to the significance thereof unless said explanation is not deemed
necessary by the Representatives; or
(B) the information included or incorporated in the Company
Registration Statement and Company Prospectus in response to
Regulation S-K, Item 301 (Selected Financial Data), Item 302
(Supplementary Financial Information), Item 402 (Executive
Compensation) and Item 503(d) (Ratio of Earnings to Fixed
Charges) is not in conformity with the applicable disclosure
requirements of Regulation S-K;
(iii) they have performed certain other specified procedures as
a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and its subsidiaries) set
forth in the Company Registration Statement and the Company
Prospectus, including the information set forth under the captions
"Summary," "Summary Unaudited Pro Forma Financial and other Data,"
"Summary Financial and Other Data of CCIC," "Risk Factors," "Unaudited
Pro Forma Condensed Consolidated Financial Statements" "Selected
Financial and Other Data of CCIC," "Selected Financial and Other Data
of CTSH," "Capitalization," "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Business," "Selling
Stockholder," "Recent and Proposed Transactions," and "Description of
Capital Stock" in the Company Prospectus and the information included
or incorporated in Items 1, 2, 6, 7, 8 and 11 of the Company's Annual
Report on Form 10-K, incorporated in the Company Registration
Statement and the Company Prospectus, agrees with the accounting
records of the Company and its subsidiaries, excluding any questions
of legal interpretation.
References to the Company Prospectus in this paragraph (i) include any
supplement thereto to the date of the letter.
(l) The Shares shall have been duly approved for listing through the
Nasdaq National Market System, and satisfactory evidence of such action
shall have been provided to the Representatives.
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(m) The DECS shall have been approved for listing on the Nasdaq
National Market System, subject only to official notice of issuance.
(n) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
(o) Each Fundamental Agreement shall have been executed and delivered
by all parties thereto, and each Seller shall have delivered to the
Collateral Agent the number of Shares required by the Collateral Agreement
to which such Seller is a party to be initially pledged and assigned by
such Seller thereunder in accordance with the requirements of such
Collateral Agreement.
(p) At the Execution Time, the Company shall have furnished to the
Representatives a letter substantially in the form of Exhibit A hereto from
each executive officer and director of the Company addressed to the
Representatives relating to sales and certain other dispositions of shares
of common stock of the Company or certain other securities, and such letter
agreements shall be in full force and effect on the Closing Date.
(q) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Company Registration Statement (exclusive
of any amendment thereof) and the Company Prospectus (exclusive of any
supplement thereto), there shall not have been (i) any change or decrease
specified in the letter or letters referred to in paragraph (i) of this
Section 10 or (ii) any change, or any development involving a prospective
change, in or affecting the condition (financial or otherwise), earnings,
business or properties of the Company and its subsidiaries taken as a
whole, whether or not arising from transactions in the ordinary course of
business, except as set forth in or contemplated in the Company Prospectus
(exclusive of any supplement thereto) the effect of which, in any case
referred to in clause (i) or (ii) above, is, in the judgment of the
Representatives, so material and adverse as to make it impractical or
inadvisable to proceed with the offering or delivery of the DECS as
contemplated by the Trust Registration Statement and the Company
Registration Statement (in either case, exclusive of any amendment thereof)
and the Trust Prospectus and the Company Prospectus (in either case,
exclusive of any supplement thereto).
(r) Subsequent to the Execution Time, there shall not have been any
decrease in the rating of any of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act) or any notice given of any intended
or potential decrease in any such rating or of a possible change in any
such rating that does not indicate the direction of the possible change.
(s) Prior to the Closing Date, the Company, the Trust and each of the
Sellers shall have furnished to the Representatives such further
information, certificates and documents as the Representatives may
reasonably request.
If any of the conditions specified in this Section 10 shall not have
been fulfilled when and as provided in this Agreement, or if any of the opinions
and certificates mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the Representatives and counsel
for the Underwriters, this Agreement and all obligations of the Underwriters
hereunder may be canceled at, or at any time prior to, the Closing Date by the
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<PAGE>
Representatives. Notice of such cancellation shall be given to the Trust and
the Company in writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 10 shall be
delivered at the office of Cleary, Gottlieb, Steen & Hamilton, counsel for the
Underwriters, at One Liberty Plaza, New York, New York 10006, on the Closing
Date.
11. Expenses.
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(a) Except as otherwise provided herein, each of the Sellers,
severally and jointly, will pay all expenses incident to the performance by the
Trust and each Seller of their respective obligations under this Agreement and
their Contracts and Collateral Agreements, including (i) the preparation,
printing and filing of the Notification and the Trust Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto, (ii) the preparation, printing and delivery of this
Agreement, the Trust Agreement, each of the Fundamental Agreements and such
other documents as may be required in connection with the offering, purchase,
sale, issuance or delivery of the DECS, (iii) the preparation, issuance and
delivery of the certificates for the DECS to the Representatives, (iv) the fees
and disbursements of the Trust's counsel, accountants and other advisors, (v)
the fees and disbursements of the Sellers' counsel and other advisors, (vi) the
qualification of the DECS under state securities laws in accordance with the
provisions of Section 7(d) hereof, including filing fees and the reasonable fees
and disbursements of the counsel for the Underwriters in connection therewith
and in connection with the preparation of the related blue sky survey and any
supplement thereto, (vii) the printing and delivery to the Representatives of
copies of each Preliminary Trust Prospectus, the Trust Prospectus and any
amendments or supplements thereto, (viii) the fees and expenses of any transfer
agent or registrar for the DECS, (ix) the filing fees incident to, and the
reasonable fees and disbursements of counsel to the Underwriters in connection
with, securing any required review by the NASD of the Trust Registration
Statement and the offering of the DECS in accordance with the provisions of
Section 7(d) hereof, (x) the fees and expenses incurred in connection with the
listing of the DECS on the Nasdaq National Market System and (xi) the fees and
expenses incurred in connection with the preparation and filing of a
registration statement under the Exchange Act relating to the DECS. Each of the
Sellers, severally and jointly, will reimburse the Underwriters through Salomon
Smith Barney on the Closing Date in immediately available funds for the Up-Front
Fee Amount and the Up-Front Expense Amount (each as defined in the Fund Expense
Agreement dated as of the Closing Date between Salomon Smith Barney and BoNY)
and for the up-front fees of the trustees of the Trust paid by Salomon Smith
Barney. Notwithstanding the foregoing, the Sellers shall not be obligated
pursuant to this Section 11(a) to (x) pay any expenses of the Trust or reimburse
the Underwriters for the Up-Front Fee Amount and the Up-Front Expense Amount
except to the extent the expenses of the trust paid by the Underwriters, the Up-
Front Fee Amount and the Up-Front Expense Amount exceed $500,000.00 in the
aggregate or (y) to pay any fees or disbursements of counsel to the Underwriters
other than in connection with clauses (vi) and (ix) of this Section 11(a).
(b) The Company will pay all expenses incident to the performance by
it of its obligations under this Agreement, including (i) the preparation,
printing and filing of the Company Registration Statement (including financial
statements and exhibits) as originally filed and of each amendment thereto, (ii)
the preparation, issuance and delivery of the certificates for the Shares to the
Trust, (iii) the fees and disbursements of the Company's counsel, accountants
and other advisors, (iv) the qualification of the Shares under state securities
laws in accordance with the provisions of Section 8(e) hereof, including filing
fees and the reasonable fees and disbursements of counsel for
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<PAGE>
the Underwriters in connection therewith and in connection with the preparation
of any related blue sky survey and any supplement thereto, (v) the printing and
delivery to the Representatives of copies of each Preliminary Company
Prospectus, the Company Prospectus and any amendments or supplements thereto,
(vi) the fees and expenses of any transfer agent or registrar for the Shares,
(vii) the filing fees incident to, and the reasonable fees and disbursements of
counsel to the Underwriters in connection with, securing any required review by
the NASD of the Company Registration Statement and the offering of the Shares in
accordance with the provisions of Section 8(e) hereof and (viii) the fees and
expenses incurred in connection with the approval of the Shares for listing
through the Nasdaq National Market System.
(c) If the sale of the DECS provided for herein is not consummated
because any condition to the obligations of the Underwriters set forth in
Section 10 hereof is not satisfied, because of any termination pursuant to
Section 15 hereof or because of any refusal, inability or failure on the part of
the Company or any Seller to perform any agreement herein or comply with any
provision hereof other than by reason of a default by the Underwriters, each of
the Sellers, jointly and severally, will reimburse the Underwriters through
Salomon Smith Barney upon demand for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been incurred by
the Underwriters in connection with the proposed purchase and sale of the DECS.
(d) The provisions of this Section 11 shall not supersede or otherwise
affect any agreement that the Company and the Sellers, or Salomon Smith Barney
and Goldman Sachs, may otherwise have for the allocation of such expenses among
themselves.
12. Indemnification and Contribution.
--------------------------------
(a) The Company agrees to indemnify and hold harmless each
Underwriter, the directors, officers, employees and agents of each Underwriter
and each person who controls any Underwriter within the meaning of either the
Act or the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Company Registration Statement as originally filed or in any
amendment thereof, or in any Preliminary Company Prospectus or the Company
Prospectus, or in any amendment thereof or supplement thereto (each such
document, a "Company Registration Document"), or the omission or alleged
omission to state in any Company Registration Document a material fact required
to be stated therein or necessary to make the statements therein not misleading
or (ii) any untrue statement or alleged untrue statement of a material fact
contained in the Trust Registration Statement as originally filed or in any
amendment thereof, or in any Preliminary Trust Prospectus or the Trust
Prospectus, or in any amendment thereto or supplement thereto (each such
document, a "Trust Registration Document") or the omission or alleged omission
to state in any Trust Registration Document a material fact required to be
stated therein or necessary to make the statements therein not misleading; and
in each such case agrees to reimburse each such indemnified party, as incurred,
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on
32
<PAGE>
behalf of any Underwriter through the Representatives specifically for inclusion
therein. This indemnity agreement will be in addition to any liability which the
Company may otherwise have.
(b) Each Seller severally agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who signs the Company
Registration Statement, each Underwriter, the directors, officers, employees and
agents of each Underwriter and each person who controls the Company or any
Underwriter within the meaning of either the Act or the Exchange Act and each
other Seller, if any, to the same extent as the foregoing indemnity from the
Company to each Underwriter, but only with reference to written information
furnished to the Company by or on behalf of such Seller specifically for
inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which any Seller may
otherwise have.
(c) Each Underwriter severally and not jointly agrees to indemnify and
hold harmless the Company, each of its directors, each of its officers who signs
the Company Registration Statement, and each person who controls the Company
within the meaning of either the Act or the Exchange Act and each Seller, to the
same extent as the foregoing indemnity to each Underwriter, but only with
reference to written information relating to such Underwriter furnished to the
Company by or on behalf of such Underwriter through the Representatives
specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability which
any Underwriter may otherwise have. The Company and each Seller acknowledge
that the statements set forth in the last paragraph of the cover page regarding
delivery of the DECS and, under the heading "Plan of Distribution," (i) the list
of Underwriters and their respective participation in the sale of the DECS, (ii)
the sentences related to concessions and reallowances and (iii) the paragraph
related to stabilization, syndicate covering transactions and penalty bids in
any Preliminary Company Prospectus, the Company Prospectus, any Preliminary
Trust Prospectus or the Trust Prospectus constitute the only information
furnished in writing by or on behalf of the several Underwriters for inclusion
in any Company Preliminary Prospectus, Trust Preliminary Prospectus, the Company
Prospectus or the Trust Prospectus.
(d) Promptly after receipt by an indemnified party under this Section
12 of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against the indemnifying party under
this Section 12, notify the indemnifying party in writing of the commencement
thereof; but the failure so to notify the indemnifying party (i) will not
relieve it from liability under paragraph (a), (b) or (c) above unless and to
the extent it did not otherwise learn of such action and such failure results in
the forfeiture by the indemnifying party of substantial rights and defenses and
(ii) will not, in any event, relieve the indemnifying party from any obligations
to any indemnified party other than the indemnification obligation provided in
paragraph (a), (b) or (c) above. The indemnifying party shall be entitled to
appoint counsel of the indemnifying party's choice at the indemnifying party's
expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the
33
<PAGE>
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party will
not, without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(e) In the event that the indemnity provided in paragraph (a), (b) or
(c) of this Section 12 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company, the Sellers and the Underwriters
agree to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which the Company,
one or more of the Sellers and one or more of the Underwriters may be subject in
such proportion as is appropriate to reflect the relative benefits received by
the Company, by the Sellers and by the Underwriters from the offering of the
DECS; provided, however, that in no case shall any Underwriter (except as may be
provided in any agreement among underwriters relating to the offering of the
DECS) be responsible for any amount in excess of the underwriting discount or
commission applicable to the DECS purchased by such Underwriter hereunder. If
the allocation provided by the immediately preceding sentence is unavailable for
any reason, the Company, the Sellers and the Underwriters shall contribute in
such proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company, of the Sellers and of the Underwriters
in connection with the statements or omissions which resulted in such Losses as
well as any other relevant equitable considerations. Benefits received by the
Company and by the Sellers shall be deemed to be equal to the total net proceeds
from the offering (before deducting expenses) received by each of them, and
benefits received by the Underwriters shall be deemed to be equal to the total
underwriting discounts and commissions, in each case as set forth on the cover
page of the Trust Prospectus. Relative fault shall be determined by reference
to, among other things, whether any untrue or any alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information provided by the Company, the Sellers on the one hand or
the Underwriters on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company, the Sellers and the Underwriters
agree that it would not be just and equitable if contribution were determined by
pro rata allocation or any other method of allocation which does not take
account of the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (e), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 12, each person who controls an
Underwriter within the meaning of either the Act or the Exchange Act and each
director, officer, employee and agent of an Underwriter shall have the same
rights to contribution as such Underwriter, and each person who controls the
Company within the meaning of either the Act or the Exchange Act, each officer
of the Company who shall have signed the Company Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of this
paragraph (e).
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<PAGE>
13. Default by an Underwriter. If any one or more Underwriters shall
-------------------------
fail to purchase and pay for any of the DECS agreed to be purchased by such
Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of DECS set forth
opposite their names in Schedule I hereto bears to the aggregate amount of DECS
set forth opposite the names of all the remaining Underwriters) the DECS which
the defaulting Underwriter or Underwriters agreed but failed to purchase;
provided, however, that in the event that the aggregate amount of DECS which the
- -------- -------
defaulting Underwriter or Underwriters agreed but failed to purchase shall
exceed 10% of the aggregate amount of DECS set forth in Schedule I hereto, the
remaining Underwriters shall have the right to purchase all, but shall not be
under any obligation to purchase any, of the DECS, and if such nondefaulting
Underwriters do not purchase all the DECS, this Agreement will terminate without
liability to any nondefaulting Underwriter, the Company or the Sellers. In the
event of a default by any Underwriter as set forth in this Section 14, the
Closing Date shall be postponed for such period, not exceeding five Business
Days, as the Representatives shall determine in order that the required changes
in the Company Registration Statement, the Company Prospectus, the Trust
Registration Statement and the Trust Prospectus or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting Underwriter of its liability, if any, to the Company or the
Sellers and any nondefaulting Underwriter for damages occasioned by its default
hereunder.
14. Termination. This Agreement shall be subject to termination in
-----------
the absolute discretion of the Representatives, by notice given to the Trust and
the Company prior to delivery of and payment for the DECS, if at any time prior
to such time (i) trading in any class of the Company's Common Stock shall have
been suspended by the Commission or the Nasdaq National Market or trading in
securities generally on the New York Stock Exchange or the Nasdaq National
Market shall have been suspended or limited or minimum prices shall have been
established on such Exchange or National Market, (ii) a banking moratorium shall
have been declared by either Federal or New York State authorities or (iii)
there shall have occurred any outbreak or escalation of hostilities, declaration
by the United States of a national emergency or war or other calamity or crisis,
the effect of which on financial markets of the United States is such as to make
it, in the sole judgment of the Representatives, impractical or inadvisable to
proceed with the offering or delivery of the DECS as contemplated by the Trust
Prospectus (exclusive of any supplement thereto).
15. Representations and Indemnities to Survive. The respective
------------------------------------------
agreements, representations, warranties, indemnities and other statements of the
Trust, the Company and each Seller, or their respective officers, if applicable,
and of the Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter, the Trust, the Company any Seller, or any of the
officers, directors or controlling persons referred to in Section 12 hereof, and
will survive delivery of and payment for the DECS. The provisions of Sections
11, 12 and 17 hereof shall survive the termination or cancellation of this
Agreement.
16. Notices. All communications hereunder will be in writing and
-------
effective only on receipt, and, if sent to Salomon Smith Barney, will be mailed,
delivered or telefaxed to the Salomon Smith Barney General Counsel (fax no.:
(212) 816-8571) and confirmed to the General Counsel, care of Salomon Smith
Barney, at 388 Greenwich Street, New York, New York 10013, attention: General
Counsel; if sent to the Trust, will be mailed, delivered or telefaxed and
confirmed to it at c/o Puglisi & Associates, 850 Library Avenue, Suite 204,
Newark, Delaware 19715,
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<PAGE>
Attention: Donald J. Puglisi; if sent to the Company, will be mailed, delivered,
telefaxed and confirmed to it at Crown Castle International Corp., 510 Bering
Drive, suite 500, Houston, Texas 77057(fax no.: (713) 570-3150), Attention: **.
17. Successors. This Agreement will inure to the benefit of and be
----------
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 12 hereof, and no
other person will have any right or obligation hereunder. This Agreement will
be binding on and legally enforceable against each Seller, despite the death or
legal incapacity of any shareholder, or of any holder of limited liability
company interests, of any Seller.
18. Applicable Law. This agreement will be governed by and construed
--------------
in accordance with the laws of the State of New York applicable to contracts
made and to be performed within the State of New York.
19. Counterparts. This Agreement may be executed by any one or more
------------
of the parties in any number of counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute one and the
same agreement.
22. Headings. The section headings used herein are for convenience
--------
only and shall not affect the construction hereof.
23. Definitions. The terms which follow, when used in this
-----------
Agreement, shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City.
"Commission" shall mean the Securities and Exchange Commission.
"Company Effective Date" shall mean each date and time that the
Company Registration Statement, any post-effective amendment or amendments
thereto and any Rule 462(b) Company Registration Statement became or become
effective.
"Company Prospectus" shall mean the prospectus relating to the Shares
that is used in connection with the offering and sale of the DECS and that
is first filed pursuant to Rule 424(b) together with the basic prospectus
after the Execution Time, or if no filing pursuant to Rule 424(b) is
required, shall mean the form of final prospectus relating to the Shares
that is used in connection with such offering and sale and that is included
in the Company Registration Statement at the Company Effective Date.
"Company Registration Statement" shall mean the registration statement
referred to in Section 2(a) above including incorporated documents,
exhibits and financial statements, as amended at the Execution Time (or, if
not effective at the Execution Time, in the form in which it shall become
effective) and, in the event any post-effective amendment thereto or any
Rule 462(b) Company Registration Statement becomes effective prior to the
Closing
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<PAGE>
Date, shall also mean such registration statement as so amended or such
Rule 462(b) Company Registration Statement, as the case may be. Such term
shall include any Rule 430A Information deemed to be included therein at
the Company Effective Date as provided by Rule 430A.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Goldman Sachs" shall mean Goldman, Sachs & Co.
"Investment Company Act" shall mean the Investment Company Act of
1940, as amended, and the rules and regulations of the Commission
promulgated thereunder.
"Organizational Documents" shall mean, in respect of any company,
corporation, trust, partnership, limited liability company, governmental
agency or other enterprise, as applicable, its founding act, charter,
articles of incorporation and by-laws, deed of trust, memorandum and
articles of association, statute, certificate of partnership, partnership
agreement, limited liability company agreement, or similar instrument.
"Preliminary Company Prospectus" shall mean any preliminary prospectus
referred to in Section 2(a) and any preliminary prospectus included in the
Company Registration Statement at the Company Effective Date that omits
Rule 430A Information.
"Preliminary Trust Prospectus" shall mean any preliminary prospectus
referred to in Section 1(a) above and any preliminary prospectus included
in the Trust Registration Statement at the Trust Effective Date that omits
Rule 430A Information.
"Rule 415," "Rule 424," "Rule 430A," "Rule 462," "Rule 497(h)",
"Regulation S-K" and "Regulation S-X" refer to such rules and regulations
under the Act.
"Rule 430A Information" shall mean information with respect to the
DECS, the Shares and the offering thereof permitted to be omitted from the
Trust Registration Statement (or, as used in Section 2 above, the Company
Registration Statement) when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Company Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b) relating
to the offering covered by the initial registration statement referred to
in Section 2(a) above.
"Rule 462(b) Trust Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b) relating
to the offering covered by the initial registration statement referred to
in Section 1(a) above.
"Salomon Smith Barney" shall mean Salomon Smith Barney Inc.
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<PAGE>
"Trust Effective Date" shall mean each date and time that the Trust
Registration Statement, any post-effective amendment or amendments thereto
and any Rule 462(b) Trust Registration Statement became or become
effective.
"Trust Prospectus" shall mean the prospectus relating to the DECS that
is first filed pursuant to Rule 497(h) after the Execution Time or, if no
filing pursuant to Rule 497(h) is required, shall mean the form of final
prospectus relating to the DECS included in the Trust Registration
Statement at the Trust Effective Date.
"Trust Registration Statement" shall mean the registration statement
referred to in paragraph 1(a) above, including exhibits and financial
statements, as amended at the Trust Execution Time (or, if not effective at
the Trust Execution Time, in the form in which it shall become effective)
and, in the event any post-effective amendment thereto or any Rule 462(b)
Trust Registration Statement becomes effective prior to the Closing
Date, shall also mean such registration statement as so amended or such
Rule 462(b) Trust Registration Statement, as the case may be. Such term
shall include any Rule 430A Information deemed to be included therein at
the Trust Effective Date as provided by Rule 430A.
As used herein, the terms "Trust Registration Statement," "Preliminary
Trust Prospectus" and "Trust Prospectus" shall not include the Company
Prospectus attached thereto.
38
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Trust, the Company, the Sellers and the several Underwriters.
Very truly yours,
DECS Trust V
By: ____________________________
Name: Donald J. Puglisi
Title: Managing Trustee
Crown Castle International Corp.
By:_____________________________
Name:
Title:
Sellers:
RC Investors Corp.
By:_____________________________
Name:
Title:
BC Investors Corp.
By:_____________________________
Name:
Title:
RACG Holdings LLC
By:_____________________________
Name:
Title:
BACG Holdings LLC
By:_____________________________
Name:
Title:
<PAGE>
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
Salomon Smith Barney Inc.
By:___________________________
Name:
Title:
Goldman, Sachs & Co.
By:___________________________
Name:
Title:
For themselves and the other several Underwriters, if any, named in Schedule I
to the foregoing Agreement
<PAGE>
SCHEDULE I
----------
Number of Underwritten
----------------------
DECS to be
----------
Underwriters Purchased
- ------------ ---------
Salomon Smith Barney Inc. **
Goldman, Sachs & Co. **
Total.......................... [ ]
===========
<PAGE>
SCHEDULE II
-----------
List of Sellers
Underwritten Option Total
Seller Shares Shares Shares
- -------------------------- --------------- ------------ ----------
RC Investors Corp.
BC Investors Corp.
RACG holdings LLC
BACG Holdings LLC
Total
<PAGE>
[Form of Lock-Up Agreement] Exhibit A
[Letterhead of executive officer of Crown Castle International Corp.]
Crown Castle International Corp.
--------------------------------
Public Offering by DECS Trust V
-------------------------------
,1999
Salomon Smith Barney Inc.
Goldman, Sachs & Co.
As Representatives of the several Underwriters,
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
This letter is being delivered to you in connection with the proposed
Underwriting Agreement (the "Underwriting Agreement"), among the Sellers (as
defined therein) Crown Castle International Corp. (the "Company"), DECS Trust V
(the "Trust"), a Delaware business trust, and each of you as representatives of
a group of Underwriters named therein, relating to an underwritten public
offering of DECS representing shares of beneficial interest in the Trust.
In order to induce you and the other Underwriters to enter into the
Underwriting Agreement, the undersigned will not, without the prior written
consent of Salomon Smith Barney Inc. for a period of 45 days after the date of
execution of the Underwriting Agreement, (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase or otherwise transfer or
dispose of, directly or indirectly, or announce the offering of any shares of
any class of common stock of the Company or any securities convertible into or
exercisable or exchangeable for shares of any class of common stock of the
Company (whether such shares or any such securities are now owned or hereafter
acquired) or (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
Shares of any class of the common stock of the Company, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Shares of any class of common stock of the Company or such other securities,
in cash or otherwise.
43
<PAGE>
If for any reason the Underwriting Agreement shall be terminated prior
to the Closing Date (as defined in the Underwriting Agreement), the agreement
set forth above shall likewise be terminated.
Yours very truly,
[Signature of executive officer ]
[Name and address of executive officer]
<PAGE>
EXHIBIT (j)
AMENDED AND RESTATED CUSTODIAN AGREEMENT
This AMENDED AND RESTATED CUSTODIAN AGREEMENT dated as of August 4,
1999 by and between The Bank of New York, a New York banking corporation
(the "Custodian"), and DECS Trust V (such trust and the trustees thereof
----------
acting in their capacity as such being referred to herein as the "Trust"),
-----
a statutory business trust organized under the Business Trust Act of the State
of Delaware pursuant to a Declaration of Trust dated as of April 22, 1999 (as it
may be amended and restated from time to time, the "Trust Agreement").
---------------
WITNESSETH
WHEREAS, the Trust is a non-diversified, closed-end management
investment company, as defined in the Investment Company Act of 1940 (the
"Investment Company Act"), formed to purchase and hold certain U.S. treasury
- -----------------------
securities (the "Treasury Securities"), to enter into and hold a forward
-------------------
purchase contract with one or more existing shareholders of Crown Castle
International Corp. (individually, a "Contract" and collectively, the
--------
"Contracts"), to hold security for the performance of such shareholder of their
---------
obligations under the Contracts pursuant to related collateral agreement (the
"Collateral Agreement") and to issue DECS in accordance with the terms and
- ---------------------
conditions of the Trust Agreement;
WHEREAS, the Trustee and the Custodian previously entered into a
Custodian Agreement dated as of April 23, 1999 (the "Original Custodian
------------------
Agreement") whereby the Trustee engaged the services of the Custodian to perform
- ---------
certain custodial duties for the Trust and the Custodian agreed to assume such
duties on the terms and conditions set forth in the Original Custodian
Agreement;
WHEREAS, the Trustee and the Custodian desire to amend and restate the
Original Custodian Agreement as provided herein. Upon the execution and
delivery of copies hereof, the Original Custodian Agreement will be
automatically amended and restated as provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties agree as follows:
1. Definitions. Capitalized terms not otherwise defined herein shall
have the respective meanings specified in the Trust Agreement.
2. Appointment of Custodian; Transfer of Assets. The Trust hereby
constitutes and appoints the Custodian, and the Custodian accepts such
appointment, as agent of the Trust and as custodian of all of the property,
including but not limited to, the Contracts, the Treasury Securities, the
Temporary Investments, any cash and any other property at any time owned or held
by the Trust (other than Pledged Items (as defined in the Collateral Agreements)
held by the Collateral Agent thereunder) (collectively, the "Assets"). The
------
Trust hereby deposits the Assets owned by the Trust on the date hereof with the
Custodian and the Custodian hereby accepts such Assets into its custody, and the
Trust shall deliver to the Custodian all additional Assets, including all
monies, securities and other property, received by the Trust at any time
<PAGE>
during the period of this Agreement, subject to the following terms and
conditions. The Custodian hereby agrees that it shall hold the Assets in a
segregated custody account, separate and distinct from all other accounts, in
accordance with Section 17(f) of, and in such manner as shall constitute the
segregation and holding in trust within the meaning of, the Investment Company
Act and the rules and regulations thereunder. The Trust authorizes the
Custodian, for any Assets held hereunder, to use the services of any United
States securities depository permitted to perform such services for registered
investment companies and their custodians under Rule 17f-4 under the Investment
Company Act and which have been approved by the Trust, including but not limited
to, The Depository Trust Company and the Federal Reserve Book Entry System. The
Custodian shall be under no duty or obligation to inspect, review or examine any
Assets to determine that they are genuine, enforceable, or appropriate for the
represented purpose or that they are other than what they purport to be on their
face.
3. Asset Disposition; Examinations. The Custodian shall have no
power or authority to assign, hypothecate, pledge or otherwise dispose of the
Assets, except pursuant to a written direction in accordance with paragraph 4
below and then only for the account of the Trust. The Assets shall be subject
to no lien or charge of any kind in favor of the Custodian for itself or for any
other Person claiming through the Custodian. The Custodian shall permit actual
examination of the Assets by the Trust's independent public accountant at the
end of each annual and semi-annual fiscal period of the Trust and at least one
other time during the fiscal year of the Trust chosen by such independent public
accountant and shall permit the inspection of the Assets by the Commission
through its employees or agents during the normal business hours of the
Custodian upon reasonable request.
4. Authorized Actions. The Custodian shall take such actions with
respect to the Assets as directed in writing by any Trustee or by any officer of
the Administrator as may be received by the Custodian from time to time.
5. Custodian's Actions Taken In Good Faith. In connection with the
performance of its duties under this Agreement, the Custodian shall have no
duties or obligations other than those specifically set forth herein or in the
Trust Agreement or as may subsequently be agreed in writing by the parties
hereto and shall be under no liability to the Trust or any Holder for any action
taken in good faith in reliance on any paper, order, certification, list,
demand, request, consent, affidavit, notice, opinion, direction, endorsement,
assignment, resolution, draft or other document, prima facie properly executed,
or for the disposition of the Assets pursuant to the Trust Agreement or in
respect of any action taken or suffered under the Trust Agreement in good faith,
in accordance with an opinion of counsel or at the direction of the Trustees
pursuant hereto; provided that this provision shall not protect the Custodian
against any liability to which it would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
hereunder. Notwithstanding any other provision of this Agreement, the Custodian
shall under no circumstances be liable for any punitive, exemplary, indirect or
consequential damages.
6. Trust Agreement Validity. The Custodian shall not be responsible
for the validity or sufficiency of the Trust Agreement or the due execution
thereof, or for the form, character, genuineness, sufficiency, value or validity
of any of the Assets and the Custodian shall in no event assume or incur any
liability, duty or obligation to any Holder or to the Trustees,
2
<PAGE>
other than as expressly provided herein. The Custodian shall not be responsible
for or in respect of the validity of any signature by or on behalf of the
Trustees.
7. Litigation Obligations, Costs and Indemnity. The Custodian shall
not be under any obligation to appear in, prosecute or defend any action which
in its opinion may involve it in expense or liability, unless it shall be
furnished with such reasonable security and indemnity against such expense or
liability as it may require, and any pecuniary costs of the Custodian from such
actions shall be expenses which are reimbursable pursuant to paragraph 13
hereof.
8. Taxes; Trust Expenses. In no event shall the Custodian be
personally liable for any taxes or other governmental charges imposed upon or in
respect of the Assets or upon the monies, securities or other properties
included therein. The Custodian shall be reimbursed and indemnified by the
Trust for all such taxes and charges, for any tax or charge imposed against the
Trust and for any expenses, including counsel fees, interest, penalties and
additions to tax which the Custodian may sustain or incur with respect to such
taxes or charges.
9. Custodian Resignation, Succession. (a) The Custodian may resign
by executing an instrument in writing resigning as Custodian and delivering the
same to the Trustees, not less than 60 days before the date specified in such
instrument when, subject to clause (b) of this paragraph 9, such resignation is
to take effect. Upon receiving such notice of resignation, the Trustees shall
use their reasonable efforts promptly to appoint a successor Custodian in the
manner and meeting the qualifications provided in the Trust Agreement, by
written instrument or instruments delivered to the resigning Custodian and the
successor Custodian.
(b) In case no successor Custodian shall have been appointed within
30 days after notice of resignation has been received by the Trustees, the
resigning Custodian may forthwith apply to a court of competent jurisdiction for
the appointment of a successor Custodian. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribed, appoint a successor
Custodian.
10. Custodian Removal. The Trust may remove the Custodian upon 60
days' prior written notice to the Custodian and appoint a successor Custodian.
In case at any time the Custodian shall not meet the requirements set forth in
the Trust Agreement or shall become incapable of acting or if a court having
jurisdiction shall enter a decree or order for relief in respect of the
Custodian in an involuntary case, or the Custodian shall commence a voluntary
case, under any applicable bankruptcy, insolvency, or other similar law now or
hereafter in effect, or any receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) for the Custodian or for any substantial part
of its property shall be appointed, or the Custodian shall make any general
assignment for the benefit of creditors, or shall generally fail to pay its
debts as they become due, the Trust may remove the Custodian immediately and
appoint a successor Custodian. The termination of the Administration Agreement
or the Paying Agent Agreement shall cause the removal of the Custodian
simultaneously therewith.
11. Transfers to Successor Custodian. Upon the request of any
successor Custodian, the Custodian hereunder shall, upon payment of all amounts
due it, execute and
3
<PAGE>
deliver an instrument acknowledged by it transferring to such successor
Custodian all the rights and powers of the retiring Custodian; and the retiring
Custodian shall transfer, deliver and pay over to the successor Custodian the
Assets at the time held by it hereunder, if any, together with all necessary
instruments of transfer and assignment or other documents properly executed
necessary to effect such transfer and such of the records or copies thereof
maintained by the retiring Custodian in the administration hereof as may be
requested by the successor Custodian, and shall thereupon be discharged from all
duties and responsibilities hereunder. Any resignation or removal of the
Custodian shall become effective upon such acceptance of appointment by the
successor Custodian. The indemnification of the resigning Custodian provided for
hereunder shall survive any resignation, discharge or removal of the Custodian
hereunder.
12. Custodian Merger, Consolidation. Any corporation into which the
Custodian may be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Custodian shall be a party, shall be the successor Custodian hereunder and
under the Trust Agreement without the execution or filing of any paper,
instrument or further act to be done on the part of the parties hereto or
thereto, provided that such corporation meets the requirements set forth in the
Trust Agreement.
13. Compensation; Expenses. The Custodian shall receive compensation
for performing the usual, ordinary, normal and recurring services under this
Custodian Agreement and, with the prior written approval of the Trust,
reimbursement for any and all expenses and disbursements incurred hereunder, as
provided in Section 3.1 of the Administration Agreement.
14. Section 17(f) Qualification. The Custodian hereby represents
that it is qualified to act as a custodian under Section 17(f) of the Investment
Company Act.
15. Custodian's Limited Liability. The Trust shall indemnify and
hold the Custodian harmless from and against any loss, damages, cost or expense
(including the costs of investigation, preparation for and defense of legal
and/or administrative proceedings related to a claim against it and reasonable
attorneys' fees and disbursements), liability or claim incurred by reason of any
inaccuracy in information furnished to the Custodian by the Trustees, or any act
or omission in the course of, connected with or arising out of any services to
be rendered hereunder, provided that the Custodian shall not be indemnified and
held harmless from and against any such loss, damages, cost, expense, liability
or claim arising from its willful misfeasance, bad faith or gross negligence in
the performance of its duties, or its reckless disregard of its duties and
obligations hereunder. Neither the Federal Reserve Book Entry System nor the
Depository Trust Company shall be deemed to be agents of the Custodian.
16. Rights of Set-Off; Banker's Lien. The Custodian hereby waives
all rights of set-off or banker's lien it may have with respect to the Assets
held by it as Custodian hereunder.
17. Termination. This Agreement shall terminate upon the earlier of
the termination of the Trust or the appointment of a successor Custodian.
4
<PAGE>
18. Choice of Law. This Agreement is executed and delivered in the
State of New York, and all laws or rules of construction of the State of New
York shall govern the right of the parties hereto and the interpretation of the
provisions hereof.
19. Notices. Any notice to be given to the Trust hereunder shall be
in writing and shall be duly given if mailed or delivered to DECS Trust V, c/o
Tyler Dickson, Salomon Smith Barney Inc., 390 Greenwich Street, New York, New
York 10013, Tel. (212) 723-7325, Fax. (212) 723-8874, and to the Custodian if
mailed or delivered to The Bank of New York, 101 Barclay Street, Floor 12E, New
York, New York 10286, Attention: Betty Cocozza, Tel.: (212) 815-5366, Fax:
(212) 815-7157 or at such other address as shall be specified by the addressee
to the other party hereto in writing.
20. No Third Party Beneficiaries. Nothing herein, express or
implied, shall give to any Person, other than the Trust, the Custodian and their
respective successors and assigns, any benefit of any legal or equitable right,
remedy or claim hereunder.
21. Amendments; Trust Agreement Changes; Waiver. This Agreement
shall not be deemed or construed to be modified, amended, rescinded, canceled or
waived, in whole or in part, except by a written instrument signed by a duly
authorized representative of the party to be charged. The Trustees shall notify
the Custodian of any change in the Trust Agreement prior to the effective date
of any such change. Failure of either party hereto to exercise any right or
remedy hereunder in the event of a breach hereof by the other party shall not
constitute a waiver of any such right or remedy with respect to any subsequent
breach.
22. Counterparts. This Agreement may be signed in counterparts with
all counterparts constituting one and the same instrument.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
DECS TRUST V
By: /s/ Tyler Dickson
---------------------------
Tyler Dickson
as Trustee
The Bank of New York
By: /s/ Lucille Firrincieli
---------------------------
Name: Lucille Firrincieli
Title: Assistant Vice President
<PAGE>
EXHIBIT (k)(1)
CGSH Draft dated 8/2/99
ADMINISTRATION AGREEMENT
This ADMINISTRATION AGREEMENT dated as of this day of
, 1999 by and between The Bank of New York, a New York banking corporation (the
"Administrator"), and DECS Trust V (such trust and the trustees thereof acting
-------------
in their capacity as such being referred to herein as the "Trust"), a statutory
-----
business trust organized under the Business Trust Act of the State of Delaware
pursuant to a Declaration of Trust dated as of April 22, 1999, as amended and
restated as of July 14, 1999 and as further amended and restated as of
August 4, 1999 (the "Trust Agreement").
---------------
WITNESSETH
WHEREAS the Trust is a non-diversified, closed-end management
investment company, as defined in the Investment Company Act of 1940 (the
"Investment Company Act"), formed to purchase and hold certain U.S. treasury
- -----------------------
securities (the "Treasury Securities"), to enter into and hold the forward
-------------------
purchase contracts with one or more existing shareholders (the "Sellers") of
-------
Crown Castle International Corp. (the "Company") (individually, a "Contract" and
------- --------
collectively, the "Contracts") and to issue DECS in accordance with the terms
---------
and conditions of the Trust Agreement;
WHEREAS the Trust desires to engage the services of the Administrator
to assume certain duties and responsibilities of the Trust under the Trust
Agreement and the Investment Company Act and to undertake certain services on
behalf of and subject to the supervision of the Trust as provided herein; and
WHEREAS the Administrator is qualified and willing to assume such
duties and responsibilities and to undertake to render such services, subject to
the supervision of the Trust, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. Capitalized terms not otherwise defined herein
shall have the respective meanings specified in the Trust Agreement.
ARTICLE II
ENGAGEMENT OF ADMINISTRATOR
2.1. Engagement. The Trust hereby engages the Administrator, and the
Administrator hereby agrees to be so engaged, to provide or cause the provision
of the services hereinafter enumerated.
2.2. Services of Administrator. Subject to the supervision of the
Trust, the Administrator shall on behalf of the Trust take the actions set forth
in Sections 2.6, 2.7 and 2.8 of
<PAGE>
the Trust Agreement, to the extent such responsibilities can lawfully be
delegated to the Administrator; provided, however, that the Administrator shall
not (i) render investment advisory services to the Trust as defined in the
Investment Company Act or the Investment Advisers Act of 1940; (ii) have the
power of the Trustees to sell the Treasury Securities except as provided in
Section 2.8 of the Trust Agreement; or (iii) have the power to select the
independent public accountants for the Trust. Additionally, the Administrator
shall be responsible for rendering the following services:
(a) instructing the Paying Agent on behalf of the Trust to take the
actions set forth in Sections 2.6, 2.7, 2.8 and 3.5 of the Trust Agreement and
to otherwise perform the duties of the Paying Agent referred to in the Trust
Agreement;
(b) with the approval of the Trustees, engaging legal and other
professional advisors, other than the Trust's independent accountants as
provided in clause 2.2 (iii) above;
(c) receiving all demands, bills and invoices for expenses incurred
by or on behalf of the Trust and pay the same, or cause the Paying Agent to pay
the same, out of moneys paid to the Administrator pursuant to the Fund Expense
Agreement dated the date hereof between Salomon Smith Barney Inc. and The Bank
of New York (the "Fund Expense Agreement") but in no event out of any assets of
----------------------
the Trust, and give notice to Salomon Smith Barney Inc. pursuant to the Fund
Indemnity Agreement dated the date hereof between Salomon Smith Barney Inc. and
the Trust (the "Fund Indemnity Agreement") of any claim for Indemnification
------------------------
Expenses (as defined in the Fund Indemnity Agreement) or any threatened claim
for Indemnification Expenses;
(d) (i) keeping or causing to be kept all the books and records of
the Trust (other than those to be kept by the Paying Agent), and (ii) preparing
and, as necessary, mailing, filing or publishing, or, as appropriate, directing
the Paying Agent or cause the legal and other professional advisors engaged
pursuant to Section 2.2(b) to prepare and, as necessary, mail, file or publish
any and all notices, proxies, reports, tax returns and other communications and
documents as required under the Trust Agreement, the Investment Company Act, the
Securities Exchange Act of 1934, or the Code, or, as reasonably requested by the
Trustees, under any other applicable laws, rules or regulations or otherwise;
provided, however, that responsibility for the adequacy and accuracy of any such
reports, returns, etc. shall be that of the Trustees and provided, further, that
the Administrator shall have no liability for the adequacy or accuracy of such
reports, returns, etc.;
(e) at the request of the Trustees and upon being furnished with such
reasonable security and indemnity against any related expense or liability as
the Administrator may require, instituting and prosecuting, in accordance with
the instructions of the Trustees, legal or other appropriate proceedings to
enforce any and all rights and remedies of the Trust;
(f) receiving and reviewing on behalf of the Trust all notices,
reports, certificates and other documents regarding the Contracts and the
Treasury Securities;
2
<PAGE>
(g) making or causing to be made all necessary arrangements with
respect to meetings of Trustees and meetings of Holders, including, without
limitation, the preparation of notices, proxies and minutes, subject to the
approval of the Trustees; and
(h) in conjunction with the Trustees, determining and publishing, in
such manner as the Trustees shall direct in writing, the Trust's net asset value
in accordance with Section 8.2(c) of the Trust Agreement and the Trust's policy
as set forth in the Prospectus.
2.3. Certain Rights of the Administrator. In connection with the
performance of its duties under this Agreement, the Administrator shall not be
liable to the Trust, the Trustees or any Holder (i) for any action taken or for
refraining from taking any action hereunder except in the case of its willful
misfeasance, bad faith, gross negligence or the reckless disregard of its duties
hereunder, (ii) with respect to any action taken or omitted to be taken by it in
good faith in accordance with the directions of the Trustees or of any Trustee
or (iii) in connection with the performance of its duties under Section 2.2(h)
hereof, for good faith reliance upon information furnished by third parties
selected by the Administrator with due care. The Administrator shall under no
circumstances be liable for any punitive, exemplary, indirect or consequential
damages. The Administrator may consult with counsel and the written advice of
such counsel shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon. The Administrator may perform its duties and exercise its
rights hereunder either directly or by or through agents or attorneys appointed
with due care by it but shall be liable for the acts and omissions of such
persons to the same extent as if the functions had been performed by the
Administrator itself (except as to the extent that the Trustees shall have
directed the Administrator to retain such persons, in which event the
Administrator shall not be liable for such persons' acts or omissions). Without
limiting the generality of the preceding sentence, the Administrator (i) may
select and employ independent public accountants acceptable to the Trustees
(other than the independent public accountants referred to in clause (iii) of
Section 2.2 of this Agreement and Section 2.5(d) of the Trust Agreement) to keep
the financial books and records of the Trust, to prepare the financial
statements of the Trust and to prepare Trust tax returns, and (ii) may select
and engage attorneys acceptable to the Trustees to prepare annual, semiannual
and periodical reports, notices of meetings and proxy statements, annual reports
to Holders and other documents required under the Investment Company Act or the
Securities Exchange Act of 1934. The Administrator shall not be liable and
shall be fully protected in acting upon any writing or document reasonably
believed by it to be genuine and to have been given, signed or made by the
proper person or persons and shall not be held to have any notice of any change
of authority of any person until receipt of written notice thereof from a
Trustee.
2.4. Power of Attorney. The Trustees hereby appoint the
Administrator, acting through any duly appointed officer, the attorney-in-fact
and agent of the Trust for the purpose of performing the duties prescribed in
Sections 2.2(d)(ii) and 2.2(g) hereof.
2.5. Delivery of Certain Documents. The Trust will deliver to the
Administrator, promptly following the execution hereof: (a) a complete
conformed copy of the registration statement of the Trust under the Securities
Act and the Investment Company Act, including all amendments, exhibits and
schedules thereto; and (b) the EDGAR access codes
3
<PAGE>
(Central Index Key, CIK Confirmation Code, Password and Password Modification
Access Code) employed to file such registration statement.
ARTICLE III
COMPENSATION OF ADMINISTRATOR
3.1. Compensation. (a) For services to be rendered by the
Administrator (i) pursuant to this Agreement, (ii) as custodian under the
Custodian Agreement, dated as of , 1999, between the
Administrator, as custodian, and the Trust, (iii) as paying agent under the
Paying Agent Agreement, dated as of , 1999, between the
Administrator, as paying agent, and the Trust, and (iv) as collateral agent
under the Collateral Agreements, dated as of , 1999, among
the Administrator, as collateral agent, each of the Sellers and the Trust, and
for the payment of Trust expenses pursuant to Section 2.2(c) hereof, the
Administrator shall receive only such fees and expenses as shall be paid to it
pursuant to the terms of the Fund Expense Agreement and shall have no recourse
to the assets of the Trust for the payment of any such amounts.
(b) In connection with the performance of the services referred to in
Section 3.1(a) hereof, the Administrator, as such or in any other capacity,
shall not be required to advance, expend or risk its own funds or otherwise
incur or become exposed to financial liability in the performance of its duties
hereunder or under the other agreements referred to in Section 3.1(a) hereof.
3.2. Additional Services. If and to the extent that the Trustees
shall request the Administrator to render services for the Trust, other than
those to be rendered by the Administrator hereunder, and if the Administrator
agrees to render such services, such additional services shall be compensated
separately on terms to be agreed upon between the Administrator and the Trustees
from time to time.
ARTICLE IV
TERMINATION
4.1. Termination.
(a) This Agreement shall terminate immediately upon written notice of
termination from the Trustees to the Administrator if any of the following
events shall occur:
(i) If the Administrator shall violate or default in the performance
of any provision of this Agreement, the Trust Agreement, or the Investment
Company Act, and after notice of such violation or default, shall not cure
such violation or default within 30 days; or
(ii) If the Administrator shall be adjudged bankrupt or insolvent by
a court of competent jurisdiction, or an order shall be made by a court of
competent jurisdiction for the appointment of a receiver, liquidator, or
trustee of the Administrator, or of all or substantially all of its
property by reason of the foregoing, or approving any petition filed
against the Administrator for its reorganization, and such adjudication or
order shall remain in force or unstayed for a period of 30 days; or
4
<PAGE>
(iii) If the Administrator shall institute proceedings for voluntary
bankruptcy, or shall file a petition seeking reorganization under the
federal bankruptcy laws, or for relief under any law for the relief of
debtors, or shall consent to the appointment of a receiver of the
Administrator or of all or substantially all of its property, or shall make
a general assignment for the benefit of its creditors, or shall admit in
writing its inability to pay its debts generally as they become due; or
(iv) Upon the voluntary or involuntary dissolution of the
Administrator, or unless the Trust shall have given its prior written
consent thereto, the merger or consolidation of the Administrator with any
other entity.
If any of the events specified in clauses (ii), (iii) or (iv) of this
Section 4.1(a) shall occur, the Administrator shall give immediate written
notice thereof to the Trustees.
(b) Notwithstanding anything to the contrary contained herein, this
Agreement shall terminate immediately (i) upon termination of the Trust
Agreement, (ii) upon termination of the Paying Agent Agreement, (iii) upon
termination of all Collateral Agreements, (iv) upon termination of the Custodian
Agreement or (v) upon the resignation or removal of the Custodian.
(c) The Trustees may remove the Administrator, or the Administrator
may resign, and thereby terminate this Agreement without penalty upon 60 days'
prior written notice to the other party hereto; provided that neither party
hereto may terminate this Agreement pursuant to this Section 4.1(c) unless a
successor Administrator shall have been appointed and shall have accepted the
duties of the Administrator. If, within 30 days after notice by the
Administrator to the Trustees of termination of this Agreement, no successor
Administrator shall have been selected and accepted the duties of the
Administrator, the Administrator may apply to a court of competent jurisdiction
for the appointment of a successor Administrator.
4.2. Effect of Termination. The Administrator shall forthwith upon
termination of this Agreement deliver to the Trustees any records or other
property of the Trust then in the possession or custody of the Administrator.
Any obligation to indemnify the Administrator pursuant to Section 6.6 hereof
shall survive the termination of this Agreement.
ARTICLE V
RECORDS AND REPORTS
5.1. Books and Records; Inspection and Copying. The Administrator
shall keep, or cause to be kept, appropriate, and reasonably detailed and
accurate, books and records of all its activities pursuant to this Agreement.
The Trustees shall have the right to inspect such books and records during the
Administrator's normal business hours upon reasonable request, and to make
copies of the same at the expense of the Trust.
5.2. Access to Information. The Administrator shall make available
to each of the Trustees all information it receives and compiles with respect to
the Contracts and the Treasury Securities, the moneys available to the Trust,
the financial condition of the Trust and all other relevant matters concerning
the Trust.
5
<PAGE>
ARTICLE VI
MISCELLANEOUS
6.1. Binding Effect. Any corporation into which the Administrator
may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Administrator shall be a party, shall be the successor Administrator hereunder
and under the Trust Agreement without the execution or filing of any paper,
instrument or further act to be done on the part of the parties hereto, provided
that such corporation meets the requirements set forth in the Trust Agreement
and provided further that the Trustees have given their prior written consent to
the Administrator with respect to any such merger, conversion or consolidation.
This Agreement shall be binding on and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
6.2. Entire Agreement. This Agreement contains the entire agreement
between the parties with respect to the matters contained herein and supersedes
all prior agreements or understandings, whether oral or written. This Agreement
shall not be amended, changed, modified, or discharged, in whole or in part,
except by an instrument in writing signed by both parties hereto, or their
respective successors or permitted assigns.
6.3. Notices. Any notice, report or other communication required or
permitted to be given hereunder shall be in writing, and shall, unless some
other method of giving such notice, report or other communication is accepted by
the party to whom it is to be given or is required by the Trust Agreement or the
Investment Company Act, be given by being mailed by U.S. first class mail,
certified or registered, return receipt requested, postage prepaid, to the
following addresses of the parties hereto:
The Trust: DECS Trust V
c/o Puglisi & Associates
850 Library Avenue, Suite 204
Newark, Delaware 19715
Telephone: 302-738-6680
Telecopier: 302-738-7210
The Administrator: The Bank of New York
101 Barclay Street, Floor 12E
New York, New York 10286
Attn: Betty Cocozza
Telephone: 212-816-5366
Telecopier: 212-816-7157
Any party may at any time give written notice to the other party that
it wishes to change its address for the purposes of this Section 6.3.
6
<PAGE>
6.4. Applicable Law. The provisions of this Agreement shall be
construed and interpreted in accordance with the laws of the State of New York
as at the time in effect except to the extent such law is preempted by federal
law.
6.5. Non-assignability. This Agreement and the rights and
obligations of the parties hereunder may not be assigned or delegated by either
party without the prior written consent of the other party.
6.6. Indemnification. The Trust shall indemnify and hold the
Administrator harmless from and against any loss, damages, cost or expense
(including the costs of investigation, preparation for and defense of legal
and/or administrative proceedings related to a claim against it and reasonable
attorneys' fees and disbursements), liability or claim incurred by reason of any
inaccuracy in information furnished to the Administrator by the Trustees, or any
act or omission in the course of, connected with or arising out of any services
to be rendered hereunder, provided that the Administrator shall not be
indemnified and held harmless from and against any such loss, damages, cost,
expense, liability or claim incurred by reason of its willful misfeasance, bad
faith, or gross negligence in the performance of its duties, or its reckless
disregard of its duties and obligations hereunder.
6.7. Provisions of Law to Control. This Agreement shall be subject
to the applicable provisions of the Investment Company Act and the rules and
regulations of the Commission thereunder. To the extent that any provisions
herein contained conflict with any applicable provisions of the Investment
Company Act or such rules and regulations, the latter shall control.
6.8. Counterparts. This Agreement may be signed in counterparts with
all counterparts constituting one and the same instrument.
7
<PAGE>
IN WITNESS WHEREOF, the parties have hereunto executed this Administration
Agreement as of the day and year first above written.
DECS TRUST V
By:
-------------------------------
Donald J. Puglisi
as Managing Trustee
850 Library Avenue, Suite 204
Newark, Delaware 19716
THE BANK OF NEW YORK
By:
-------------------------------
Name:
Title:
8
<PAGE>
EXHIBIT (k)(2)
PAYING AGENT AGREEMENT
This PAYING AGENT AGREEMENT dated as of this day of
, 1999 by and between The Bank of New York, a New York banking corporation (the
"Paying Agent"), and DECS Trust V (such trust and the trustees thereof acting in
------------
their capacity as such being referred to herein as the "Trust"), a statutory
-----
business trust organized under the Business Trust Act of the State of Delaware
pursuant to a Declaration of Trust dated as of April 22, 1999, as amended and
restated as of July 14, 1999 and as further amended and restated as of
August 4, 1999 (the "Trust Agreement").
---------------
WITNESSETH
----------
WHEREAS the Trust is a non-diversified, closed-end management
investment company, as defined in the Investment Company Act of 1940 (the
"Investment Company Act"), formed to purchase and hold the U.S. treasury
- -----------------------
securities (the "Treasury Securities"), to enter into and hold forward purchase
-------------------
contracts with one or more existing shareholders of Crown Castle International
Corp. (individually, a "Contract" and collectively, the "Contracts") and to
-------- ---------
issue DECS to the public in accordance with the terms and conditions of the
Trust Agreement;
WHEREAS the Trustees desire to engage the services of the Paying Agent
to assume certain responsibilities and to perform certain duties as the transfer
agent, registrar and paying agent with respect to the DECS upon the terms and
conditions of this Agreement; and
WHEREAS the Paying Agent is qualified and willing to assume such
responsibilities and to perform such duties, subject to the supervision of the
Trustees, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties agree as follows:
ARTICLE I
---------
DEFINITIONS
1.1 Definitions. Capitalized terms not otherwise defined herein
shall have the respective meanings specified in the Trust Agreement.
ARTICLE II
----------
PAYING AGENT
2.1 Appointment of Paying Agent and Acceptance. The Trust Agreement
provides that The Bank of New York shall act as the initial Paying Agent. The
Bank of New York hereby accepts such appointment and agrees to act in accordance
with its standard procedures and the provisions of the Trust Agreement and the
provisions set forth in this Article II as Paying Agent with respect to the
DECS. Without limiting the generality of the foregoing, The Bank of New York,
as Paying Agent, agrees that it shall establish and maintain the Trust Account,
subject to the provisions of Section 2.3 hereof.
<PAGE>
2.2 Certificates and Notices. The Trustees shall deliver to the
Paying Agent the certificates and notices required to be delivered to the Paying
Agent pursuant to the Trust Agreement, and the Paying Agent shall mail or
publish such certificates or notices as required by the Trust Agreement, but the
Paying Agent shall have no responsibility to confirm or verify the accuracy of
certificates or notices of the Trustees so delivered.
2.3 Payments and Investments. The Paying Agent shall make payments
out of the Trust Account as provided in Section 3.3 of the Trust Agreement. The
Paying Agent on behalf of the Trust shall effect the transactions set forth in
Sections 2.6, 2.7, 2.8, 3.5 and 8.3 of the Trust Agreement upon instructions to
do so from the Administrator (except that with respect to its obligations under
Section 8.3 of the Trust Agreement, the Paying Agent shall act without
instructions from the Administrator) and shall invest moneys on deposit in the
Trust Account in the Temporary Investment in accordance with Section 3.5 of the
Trust Agreement. Except as otherwise specifically provided herein or in the
Trust Agreement, the Paying Agent shall not have the power to sell, transfer or
otherwise dispose of any Temporary Investment prior to the maturity thereof, or
to acquire additional Temporary Investments. The Paying Agent shall hold any
Temporary Investments to its maturity and shall apply the proceeds thereof paid
upon maturity to the payment of the next succeeding Quarterly Distribution. All
such Temporary Investments shall be selected by the Trustees from time to time
or pursuant to standing instructions from the Trustees, and the Paying Agent
shall have no liability to the Trust or any Holder or any other Person with
respect to any such Temporary Investment.
2.4 Instructions from Administrator. The Paying Agent shall execute
all instructions received from an officer of the Administrator, except to the
extent that they conflict with or are contrary to the terms of the Trust
Agreement or this Agreement.
ARTICLE III
TRANSFER AGENT AND REGISTRAR
3.1 Original Issue of Certificates. On the date DECS sold pursuant
to the Underwriting Agreement are originally issued, certificates for such DECS
shall be issued by the Trust, and, at the request of the Trustees, registered in
such names and such denominations as the Underwriters shall have previously
requested of the Trustees, executed manually or in facsimile by the Managing
Trustee and countersigned by the Paying Agent. At no time shall the aggregate
number of DECS represented by such countersigned certificates exceed the number
of then outstanding DECS except as permitted by Section 3.4 hereof.
3.2 Registry of Holders. The Paying Agent shall maintain a registry
of the Holders of the DECS.
3.3 Registration of Transfer of DECS. DECS shall be registered for
transfer or exchange, and new certificates shall be issued, in the name of the
designated transferee or transferees, upon surrender of the old certificates in
form deemed by the Paying Agent properly endorsed for transfer with (a) all
necessary endorsers' signatures guaranteed in such manner and form as the Paying
Agent may require by a guarantor reasonably believed by the Paying Agent to be
responsible, (b) such assurances as the Paying Agent shall deem necessary or
appropriate to evidence the genuineness and effectiveness of each necessary
endorsement and (c) satisfactory
2
<PAGE>
evidence of compliance with all applicable laws relating to the collection of
taxes or funds necessary for the payment of such taxes.
3.4 Lost Certificates. If there shall be delivered to the Paying
Agent (a) evidence to its satisfaction of the destruction, loss or theft of any
certificate for DECS and (b) such security or indemnity as may be required by it
to hold it and any of its agents harmless, then, in the absence of notice to the
Paying Agent that such certificate has been acquired by a bona fide purchaser,
the Managing Trustee shall execute and upon its request the Paying Agent shall
countersign and deliver, in lieu of any such destroyed, lost or stolen
certificate, a new certificate of like tenor bearing a number not
contemporaneously outstanding. Any request by the Managing Trustee to the
Paying Agent to issue a replacement or new certificate pursuant to this Section
3.4 shall be deemed to be a representation and warranty by the Trust to the
Paying Agent that such issuance will comply with provisions of law, the Trust
Agreement and the resolutions adopted by the Trustees with respect to lost
securities. If, after the delivery of such new certificate, a bona fide
purchaser of the original certificate in lieu of which such new certificate was
issued presents for payment such original certificate, the Trust and the Paying
Agent shall be entitled to recover such new certificate from the person to whom
it was delivered or any transferee thereof, except a bona fide purchaser, and
shall be entitled to recover upon the security or indemnity provided therefor to
the extent of any loss, damage, cost or expense incurred by the Trust or the
Paying Agent in connection therewith. Upon the issuance of any new certificate
under this Section 3.4, the Trust and the Paying Agent may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Paying Agent) connected therewith.
3.5 Transfer Books. The Paying Agent shall maintain the transfer
books listing the Holders of the DECS. In case of any written request or demand
for the inspection of the transfer books of the Trust or any other books in the
possession of the Paying Agent, the Paying Agent will notify the Trustees and
secure instructions as to permitting or refusing such inspection. The Paying
Agent reserves the right, however, to exhibit the transfer books or other books
to any person in case it is advised by its counsel that its failure to do so
would be unlawful.
3.6 Disposition of Canceled Certificates, Records. The Paying Agent
shall retain certificates which have been canceled in transfer or in exchange
and accompanying documentation in accordance with applicable rules and
regulations of the Commission for six calendar years from the date of such
cancellation, and shall make such records available during this period at any
time, or from time to time, for reasonable periodic, special, or other
examinations by representatives of the Commission and the Board of Governors of
the Federal Reserve System. Thereafter such records shall not be destroyed by
the Paying Agent but will be safely stored for possible future reference. In
case of any request or demand for the inspection of the register of the Trust or
any other books in the possession of the Paying Agent, the Paying Agent will
notify the Trustees and secure instructions as to permitting or refusing such
inspection. The Paying Agent reserves the right, however, to exhibit the
register or other records to any person in case it is advised by its counsel
that its failure to do so would (i) be unlawful, or (ii) expose it to liability,
unless the Trustees shall have offered indemnification satisfactory to the
Paying Agent.
3
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE TRUST
The Trust represents and warrants to the Paying Agent that:
(a) the Trust is a validly existing trust under the laws of the State
of Delaware and the Trustees have full power under the Trust
Agreement to execute and deliver this Agreement and to authorize,
create and issue the DECS;
(b) this Agreement has been duly and validly authorized, executed and
delivered by the Trust and constitutes the valid and binding
agreement of the Trust, enforceable against the Trust in
accordance with its terms, subject as to such enforceability to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to
general equitable principles;
(c) the form of the certificate evidencing the DECS complies with all
applicable laws of the State of Delaware and the State of New
York;
(d) the DECS have been duly and validly authorized, executed and
delivered by the Trust and are validly issued;
(e) the DECS have been registered under the Securities Act of 1933,
the Trust has been registered under the Investment Company Act,
and no further action by or before any governmental body or
authority of the United States or of any state thereof is required
in connection with the execution and delivery of this Agreement or
the issuance of the DECS;
(f) the execution and delivery of this Agreement and the issuance and
delivery of the DECS do not and will not conflict with, violate,
or result in a breach of, the terms, conditions or provisions of,
or constitute a default under, the Trust Agreement, any law or
regulation, any order or decree of any court or public authority
having jurisdiction over the Trust, or any mortgage, indenture,
contract, agreement or undertaking to which the Trust is a party
or by which it is bound; and
(g) no taxes are payable upon or in respect of the execution of this
Agreement or the issuance of the DECS.
ARTICLE V
DUTIES AND RIGHTS
5.1 Duties.
(a) The Paying Agent is acting solely as agent for the Trust hereunder
and owes no fiduciary duties to any other Person by reason of this
Agreement.
4
<PAGE>
(b) In the absence of bad faith, gross negligence or willful
misfeasance on its part in the performance of its duties hereunder
or its reckless disregard of its duties and obligations hereunder,
the Paying Agent shall not be liable for any action taken,
suffered, or omitted in the performance of its duties under this
Agreement or in accordance with any direction or request of the
Managing Trustee not inconsistent with the provisions of this
Agreement. The Paying Agent shall under no circumstances be
liable for any punitive, exemplary, indirect or consequential
damages hereunder.
5.2. Rights.
(a) The Paying Agent may rely and shall be protected in acting or
refraining from acting upon any communication authorized hereby
and upon any written instruction, notice, request, direction,
consent, report, certificate, share certificate or other
instrument, paper or document reasonably believed by it to be
genuine. The Paying Agent shall not be liable for acting upon any
telephone communication authorized hereby which the Paying Agent
believes in good faith to have been given by the Trustees.
(b) The Paying Agent may consult with legal counsel and the advice of
such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by
it hereunder in good faith and in reliance thereon.
(c) The Paying Agent may perform its duties and exercise its rights
hereunder either directly or by or through agents or attorneys
appointed with due care by it hereunder.
5.3 Disclaimer. The Paying Agent makes no representations as to (a)
the first two recitals of this Agreement or (b) the validity or adequacy of the
DECS.
5.4 Compensation, Expenses and Indemnification.
(a) The Paying Agent shall receive for all services rendered by it
under this Agreement and, upon the prior written approval of the
Trustees, for all expenses, disbursements and advances incurred or
made by the Paying Agent in accordance with any provision of this
Agreement (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), the compensation set
forth in Section 3.1 of the Administration Agreement.
(b) The Trust shall indemnify the Paying Agent for and hold it
harmless against any loss, liability, claim or expense (including
the costs of investigation, preparation for and defense of legal
and/or administrative proceedings relating to a claim against it
and reasonable attorneys' fees and disbursements) arising out of
or in connection with the performance of its obligations under
this Agreement, provided such loss, liability or expense is not
the result of gross negligence, willful misfeasance or bad faith
on its part in the performance of its duties hereunder or its
reckless disregard of its duties or obligations
5
<PAGE>
hereunder, including the costs and expenses of defending itself
against any claim or liability in connection with its exercise or
performance of any of its duties or obligations hereunder and
thereunder. The indemnification provided by this Section 5.4(b)
shall survive the termination of this Agreement.
ARTICLE VI
MISCELLANEOUS
6.1 Term of Agreement.
(a) The term of this Agreement is unlimited unless terminated as
provided in this Section 6.1 or unless the Trust is terminated, in
which case this Agreement shall terminate ten days after the date
of termination of the Trust. This Agreement may be terminated by
either party hereto without penalty upon 60 days' prior written
notice to the other party hereto; provided that neither party
hereto may terminate this Agreement pursuant to this Section
6.1(a) unless a successor Paying Agent shall have been appointed
and shall have accepted the duties of the Paying Agent. The
termination of the Administration Agreement or the resignation or
removal of the Custodian shall cause the termination of this
Agreement simultaneously therewith. If, within 30 days after
notice by the Paying Agent of termination of this Agreement, no
successor Paying Agent shall have been selected and accepted the
duties of the Paying Agent, the Paying Agent may apply to a court
of competent jurisdiction for the appointment of a successor
Paying Agent.
(b) Except as otherwise provided in this paragraph (b), the respective
rights and duties of the Trust and the Paying Agent under this
Agreement shall cease upon termination of this Agreement. The
Trust's representations, warranties, covenants and obligations to
the Paying Agent under Sections 4 and 5.4 hereof shall survive the
termination hereof. Upon termination of the Agreement, the Paying
Agent shall, at the Trust's request, promptly deliver to the Trust
or to any successor Paying Agent as requested by the Trust (i)
copies of all books and records maintained by it and (ii) any
funds deposited with the Paying Agent by the Trust.
6.2 Communications. Except for communications authorized to be made
by telephone pursuant to this Agreement, all notices, requests and other
communications to any party hereunder shall be in writing (including telecopy or
similar writing) and given to such person at its address or telecopy number set
forth below:
If to the Trust, DECS Trust V
addressed: c/o Puglisi & Associates
850 Library Avenue, Suite 204
Newark, Delaware 19715
Telephone: 302-738-6680
Telecopier: 302-738-7210
6
<PAGE>
with a copy to the Administrator if the duties of the Administrator are being
performed by a Person other than the Person performing the obligations of the
Paying Agent.
If to the Paying Agent, The Bank of New York
addressed: 101 Barclay Street, Floor 12E
New York, New York 10286
Attn: Betty Cocozza
Telephone: 212-815-5366
Telecopier: 212-815-7157
or such other address or telecopy number as such party may hereafter specify for
such purposes by notice to the other party. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of the Trust by the Trustees (or by the
Administrator, provided that the Trust shall not have delivered to the Paying
Agent an instrument in writing revoking the authorization of the Administrator
to act for it pursuant hereto) and on behalf of the Paying Agent by a Senior
Vice President or Vice President of the Paying Agent assigned to its Corporate
Trust Department.
6.3 Entire Agreement. This Agreement contains the entire agreement
between the parties relating to the subject matter hereof, and there are no
other representations, endorsements, promises, agreements or understandings,
oral, written or inferred, between the parties relating to the subject matter
hereof.
6.4 No Third Party Beneficiaries. Nothing herein, express or
implied, shall give to any Person, other than the Trustees, the Paying Agent and
their respective successors and assigns, any benefit of any legal or equitable
right, remedy or claim hereunder.
6.5 Amendment; Waiver.
(a) This Agreement shall not be deemed or construed to be modified,
amended, rescinded, canceled or waived, in whole or in part,
except by a written instrument signed by a duly authorized
representative of the party to be charged. The Trust shall notify
the Paying Agent of any change in the Trust Agreement prior to the
effective date of any such change.
(b) Failure of either party hereto to exercise any right or remedy
hereunder in the event of a breach hereof by the other party shall
not constitute a waiver of any such right or remedy with respect
to any subsequent breach.
6.6 Successors and Assigns. Any corporation into which the Paying
Agent may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Paying Agent shall be a party, shall be the successor Paying Agent under the
Trust Agreement without the execution or filing of any paper, instrument or
further act to be done on the part of the parties hereto, provided that such
corporation meets the requirements set forth in the Trust Agreement and provided
further that the Trust has given its prior written consent to the Paying Agent
with respect to any such merger,
7
<PAGE>
conversion or consolidation. This Agreement shall be binding upon, inure to the
benefit of, and be enforceable by, the respective successors of each of the
Trust and the Paying Agent. This Agreement shall not be assignable by either the
Trust or the Paying Agent without the prior written consent of the other party.
6.7 Severability. If any clause, provision or section hereof shall
be ruled invalid or unenforceable by any court of competent jurisdiction, the
invalidity or unenforceability of such clause, provision or section shall not
affect any of the remaining clauses, provisions or sections hereof.
6.8 Execution in Counterparts. This Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
6.9 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without giving effect to
principles of conflicts of law.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the date first above written.
DECS TRUST V
By:
---------------------------------
Donald J. Puglisi, as Managing Trustee
THE BANK OF NEW YORK
By:
---------------------------------
Name:
Title:
<PAGE>
EXHIBIT (k)(3)
FORWARD PURCHASE AGREEMENT
Between
,
As Seller,
and
DECS TRUST V, As Purchaser
Dated as of
, 1999
<PAGE>
FORWARD PURCHASE AGREEMENT
THIS AGREEMENT is made as of this the day of , 1999 among , a
organized under the laws of the State of Delaware ("Seller" and, together with
------
the Other Sellers (as defined below), "Sellers") and DECS Trust V, a business
-------
trust organized under the laws of the State of Delaware under and by virtue of
an amended and restated declaration of trust, dated as of , 1999 (the
"Declaration of Trust") (such trust and the trustees thereof acting in their
- ---------------------
capacity as such being referred to herein as "Purchaser").
---------
WHEREAS, Seller owns shares of Common Stock, $.01 par value (the
"Common Stock") of Crown Castle International Corp., a Delaware corporation
- -------------
(including its successors) (the "Company");
-------
WHEREAS, Purchaser has filed with the Securities and Exchange
Commission a registration statement contemplating the offering of up to
5,645,000 DECS (the "DECS"), the terms of which contemplate delivery by
----
Purchaser to the holders thereof of a number of shares of Common Stock (or, if
some or all of the Sellers exercise their cash settlement option, cash in lieu
of part or all thereof), on , 2002 (the "Exchange Date");
-------------
WHEREAS, in exchange for certain consideration to be paid by Purchaser
hereunder and under other similar agreements, Purchaser and Seller desire to
provide for the future acquisition, sale and delivery of the aggregate number of
shares of Common Stock contemplated to be delivered by Purchaser in respect of
the DECS on the Exchange Date, at a price to be established under this Agreement
and such other agreements;
WHEREAS, Seller has agreed to enter into a Collateral Agreement (the
"Collateral Agreement") to be dated as of , 1999, among Purchaser, Seller and
- ---------------------
The Bank of New York, as collateral agent (the "Collateral Agent"), to grant
----------------
Purchaser a security interest in the shares of Common Stock specified therein
and in certain other circumstances certain other collateral to secure the
obligations of Seller hereunder;
WHEREAS, Purchaser has agreed, pursuant to an underwriting agreement,
dated , 1999 (the "Underwriting Agreement"), among Purchaser, Seller, the other
----------------------
entities named as "Sellers" therein (collectively, the "Other Sellers"), the
-------------
Company, Salomon Smith Barney Inc. and Goldman, Sachs & Co. (each an
"Underwriter", and collectively, the "Underwriters"), to issue and sell to the
- ------------ ------------
Underwriters an aggregate of 5,000,000 DECS (the "Initial DECS") and, at the
------------
Underwriters' option, up to 645,000 additional DECS (the "Additional DECS") to
---------------
cover over-allotments, if any.
NOW, THEREFORE, in consideration of their mutual covenants herein
contained, the parties hereto, intending to be legally bound, hereby mutually
covenant and agree as follows:
DEFINITIONS
-----------
As used herein, the following words and phrases shall have the
following meanings:
<PAGE>
"Acceleration Date" has the meaning provided in Article VII.
-----------------
"Acceleration Value" has the meaning provided in Article VII.
------------------
"Act" means the Securities Act of 1933, as amended, and the rules and
---
regulations of the Commission promulgated thereunder.
"Additional DECS" has the meaning provided in the recitals of this
---------------
Agreement.
"Additional Purchase Price" has the meaning provided in Section
-------------------------
1.2(b).
["Additional Share Base Amount" means a number equal to the number of
----------------------------
Additional DECS that the Underwriters elect to purchase under the Underwriting
Agreement.]
"Additional Shares" has the meaning provided in Section 1.1(b).
-----------------
["Additional STRIPS" means the U.S. Treasury obligations purchased by
-----------------
Purchaser for settlement on the Option Closing Date.]
"Adjustment Event" has the meaning provided in Section 6.2.
----------------
"Administrator" means The Bank of New York, administrator for
-------------
Purchaser under the Administration Agreement to be dated as of , 1999, or any
successor thereto.
"Affiliate" means, as to any Person, any other Person that, directly
---------
or indirectly, controls, is controlled by or is under common control with such
Person or is a partner in, or a trustee, settlor, beneficiary, member, manager,
director or officer of, such Person and, with respect to any Person that is a
natural person, further includes such Person's immediate family members,
including his father, mother, spouse and children, the spouses of his children,
his siblings and their spouses and children. For purposes of this definition,
"control" (including the terms "controlled by" or "under common control with")
- -------- ------------- -------------------------
means, as to any Person, the possession, direct or indirect, of the power to
vote ten percent or more of the corporate or beneficial interests of such Person
(or of the securities having ordinary voting power for the election of directors
of such Person), or the power to direct or cause the direction of the management
and policies of such Person, whether through ownership of voting securities or
by contract or otherwise.
"Bankruptcy Code" has the meaning provided in Section 10.7.
---------------
"Business Day" means any day that is not a Saturday, a Sunday or a day
------------
on which the NYSE or banking institutions or trust companies in The City of New
York are authorized or obligated by law or executive order to close.
"Calculation Period" means any period of Trading Days for which an
------------------
average security price must be determined pursuant to this Agreement.
"Cash Delivery Option" has the meaning provided in Section 1.3(d).
--------------------
3
<PAGE>
"Closing Price" means, for any security on any date of determination,
-------------
(i) the closing sale price (or, if no closing price is reported, the last
reported sale price) of such security (regular way) on the NYSE on such date,
(ii) if such security is not listed for trading on the NYSE on any such date, as
listed in the composite transactions for the principal United States national
securities exchange on which such security is so listed, (iii) if such security
is not so listed on a United States national securities exchange, as reported by
The NASDAQ Stock Market, (iv) if such security is not so reported, as reported
in the composite transactions for the principal United States regional
securities exchange on which such security is so listed, (v) if such security is
not so listed on a United States regional security exchange, the last quoted bid
price for such security in the over-the-counter market as reported by the
National Quotation Bureau or similar organization or (vi) if such security is
not so quoted, the average of the mid-point of the last bid and ask prices for
such security from at least three nationally recognized investment banking firms
selected by the Administrator for such purpose. The Closing Price as determined
pursuant to the foregoing shall be subject to adjustment in certain
circumstances as provided in Section 6.1(c).
"Collateral" has the meaning provided in the Collateral Agreement.
----------
"Collateral Agent" has the meaning provided in the recitals of this
----------------
Agreement.
"Collateral Agreement" has the meaning provided in the recitals of
--------------------
this Agreement.
"Commission" means the Securities and Exchange Commission.
----------
"Common Stock" has the meaning provided in the recitals of this
------------
Agreement.
"Company" has the meaning provided in the recitals of this Agreement.
-------
"Contract Shares" has the meaning provided in Section 1.1.
---------------
"Custodian" means The Bank of New York, custodian for Purchaser under
---------
the Custodian Agreement dated as of , 1999, or any successor thereto.
"Declaration of Trust" has the meaning provided in the introductory
--------------------
paragraph of this Agreement.
"DECS" has the meaning provided in the recitals of this Agreement.
----
"Dilution Adjustment" means any fraction or number by which the
-------------------
Exchange Rate shall be multiplied pursuant to Section 6.1(a) or (b) or by which
Closing Prices may be divided pursuant to Section 6.1(c).
"Event of Default" has the meaning provided in Article VII.
----------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and the rules and regulations of the Commission promulgated thereunder.
4
<PAGE>
"Exchange Date" means , 2002, subject to (i) extension by Seller
-------------
pursuant to Section 1.3(f) and (ii) subsequent acceleration by Seller pursuant
to Section 1.3(g).
"Exchange Price" means the average Closing Price per share of Common
--------------
Stock on the 20 Trading Days immediately prior to (but not including) the
Exchange Date; provided, however, that if there are not 20 Trading Days for the
Common Stock occurring later than the 60th calendar day immediately prior to,
but not including, the Exchange Date, Exchange Price shall mean the market value
per share of the Common Stock as of the Exchange Date as determined by a
nationally recognized independent investment banking firm retained for this
purpose by the Administrator; provided that for purposes of determining the
--------
payment required upon cash settlement of this Agreement in connection with a
Rollover Offering, "Exchange Price" means the Closing Price per share of Common
Stock on the Trading Day immediately preceding the date that the Rollover
Offering is priced (the "Pricing Date") or, if the Rollover Offering is priced
after 4:00 p.m., New York City time, on the Pricing Date, the Closing Price per
share of Common Stock on the Pricing Date. The Exchange Price as determined
pursuant to the foregoing shall be subject to adjustment in certain
circumstances as provided in Section 6.1(c).
"Exchange Rate" has the meaning provided in Section 1.1(c).
-------------
"Firm Payment Date" has the meaning provided in Section 1.3(a).
-----------------
"Firm Purchase Price" has the meaning provided in Section 1.2(a).
-------------------
"Firm Share Base Amount" has the meaning provided in Section 1.1(a).
----------------------
"Firm Shares" has the meaning provided in Section 1.1(a).
-----------
"Forward Purchase Contract Characterization" has the meaning provided
------------------------------------------
in Section 5.2(a).
"Independent Dealers" has the meaning provided in Article VII.
-------------------
"Initial DECS" has the meaning provided in the recitals of this
------------
Agreement.
"Initial Price" has the meaning provided in Section 1.1(c).
-------------
"Lien" has the meaning provided in the Collateral Agreement.
----
"Market Price" means, as of any date of determination, the average
------------
Closing Price per share of Common Stock on the 20 Trading Days immediately prior
to (but not including) the date of determination; provided, however, that if
there are not 20 Trading Days for the Common Stock occurring later than the 60th
calendar day immediately prior to, but not including, such date, the Market
Price shall mean the market value per share of Common Stock as of such date as
determined by a nationally recognized investment banking firm retained for such
purpose by the Administrator.
"NYSE" means the New York Stock Exchange Inc.
----
5
<PAGE>
"Officer" shall mean the manager, trustee, president, any vice
-------
president, the chief financial officer, the treasurer or the secretary of a
Person.
"Officer's Certificate" means a certificate signed by an Officer of a
---------------------
Person.
"Opinion of Counsel" means a written opinion from legal counsel who is
------------------
acceptable to the Trust.
"Option Closing Date" means the settlement dates for the Additional
-------------------
DECS under Section 5 of the Underwriting Agreement.
"Ordinary Cash Dividend" means, with respect to any consecutive 365-
----------------------
day period, any dividend with respect to Common Stock paid in cash to the extent
that the amount of such dividend, together with the aggregate amount of all
other dividends on the Common Stock paid in cash during such 365-day period,
does not exceed on a per share basis 10% of the average of the Closing Prices of
the Common Stock over such 365-day period; provided that, for purposes of the
foregoing definition, the amount of cash dividends paid on a per share basis
shall be appropriately adjusted to reflect the occurrence during such period of
any event described in Article VI.
"Other Rollover Seller" has the meaning provided in Section 1.3(e).
---------------------
"Person" means an individual, partnership, corporation (including a
------
business trust), joint stock company, trust, unincorporated association, limited
liability company, joint venture or other entity, or a government or any
political subdivision or agency thereof.
"Purchaser" has the meaning provided in the introductory paragraph of
---------
this Agreement.
"Reimbursement Agreement" means the reimbursement agreement, to be
-----------------------
dated as of , 1999 among Salomon Smith Barney Inc. and the Sellers.
"Reported Securities" has the meaning provided in Section 6.2.
-------------------
"Rollover Offering" means a reoffering or refinancing of the DECS
-----------------
effected by the Seller or Sellers not earlier than , 2002 by means of a
completed public offering or offerings or another similar offering (which may
include one or more exchange offers), by or on behalf of such Seller or Sellers.
"Rollover Offering Election" means a written election made in
--------------------------
accordance with Section 1.3(e).
"Seller" and "Sellers" have the meaning provided in the introductory
------ -------
paragraph of this Agreement.
"Threshold Appreciation Price" has the meaning provided in Section
----------------------------
1.1(c).
6
<PAGE>
"Trading Day" means, with respect to any security the Closing Price of
-----------
which is being determined, a day on which such security (A) is not suspended
from trading on any national or regional securities exchange or association or
over-the-counter market at the close of business and (B) has traded at least
once on the national or regional securities exchange or association or over-the-
counter market that is the primary market for the trading of such security.
"Transaction Value" has the meaning provided in Section 6.2.
-----------------
"Underwriter" and "Underwriters" have the meaning provided in the
----------- ------------
recitals of this Agreement.
"Underwriting Agreement" has the meaning provided in the recitals of
----------------------
this Agreement.
ARTICLE I
SALE AND PURCHASE
-----------------
1.1 Sale and Purchase.
-----------------
(a) Firm Shares. Upon the terms and subject to the conditions of this
-----------
Agreement, Seller agrees to sell to Purchaser, and Purchaser agrees to purchase
and acquire from Seller, the number of shares of Common Stock (the "Firm
----
Shares") equal to the product of ____________ (the "Firm Share Base Amount") and
----------------------
the Exchange Rate.
[(b) Additional Shares. Upon the terms and subject to the conditions
-----------------
of this Agreement, Seller agrees to sell to Purchaser, and Purchaser agrees to
purchase and acquire from Seller, a number of additional shares of Common Stock
(the "Additional Shares") equal to the product of the Additional Share Base
-----------------
Amount and the Exchange Rate. In addition to the other conditions set forth
herein, such purchase and sale shall be conditioned on the Underwriters'
purchase of the Additional Share Base Amount of Additional DECS pursuant to the
Underwriting Agreement on the Option Closing Date. Promptly after receipt by
Purchaser of notice that the Underwriters are exercising their option to
purchase Additional DECS, Purchaser will provide Seller with written notice of
such exercise by the Underwriters, stating the related Additional Share Base
Amount and the date on which Purchaser shall deliver the purchase price for the
Additional Shares, which shall be the Option Closing Date for the Additional
DECS. The Firm Shares and the Additional Shares (if any) are collectively
referred to herein as the "Contract Shares."]
---------------
(c) Exchange Rate. The "Exchange Rate" shall be determined in
------------- -------------
accordance with the following formula, subject to adjustment as a result of
certain events as provided in Article VI: (i) if the Exchange Price is greater
than $ (the "Threshold Appreciation Price"), , (ii) if the Exchange Price is
----------------------------
less than or equal to the Threshold Appreciation Price but greater than $ (the
"Initial Price"), a fraction (rounded upward or downward to the nearest
-------------
1/10,000th or, if there is not a nearest 1/10,000th, to the next higher
1/10,000th) equal to the Initial Price
7
<PAGE>
divided by the Exchange Price and (iii) if the Exchange Price is less than or
equal to the Initial Price, 1.
1.2 Purchase Price.
--------------
(a) Firm Purchase Price. The purchase price for the Firm Shares (the
-------------------
"Firm Purchase Price") shall be $[Y x Firm Share Base Amount] in cash.
-------------------
[(b) Additional Purchase Price. The purchase price for the
-------------------------
Additional Shares (the "Additional Purchase Price") shall be an amount equal to
-------------------------
(i) the difference between (1) the aggregate proceeds to Purchaser from the sale
of the Additional DECS and (2) the aggregate cost to Purchaser, as notified by
Purchaser to Seller on the Option Closing Date for the Additional DECS, of the
Additional STRIPS, multiplied by (ii) a fraction, the numerator of which is the
Firm Share Base Amount and the denominator of which is the number of Initial
DECS purchased by the Underwriters under the Underwriting Agreement.]
1.3 Payment for and Delivery of Contract Shares.
-------------------------------------------
(a) Firm Payment Date. Upon the terms and subject to the conditions
-----------------
of this Agreement, Purchaser shall deliver to Seller the Firm Purchase Price on
, 1999 (the "Firm Payment Date") at the offices of Cleary, Gottlieb, Steen &
-----------------
Hamilton, One Liberty Plaza, New York, New York 10006, or at such other place as
shall be agreed upon by Purchaser and Seller, paid by wire transfer of Federal
(immediately available same-day) funds to an account designated by Seller,
against delivery by Seller to the Collateral Agent of the number of shares of
Common Stock and/or cash, securities and other property necessary to comply with
Seller's obligations under the Collateral Agreement.
(b) Option Closing Date. Upon the terms and subject to the conditions
-------------------
of this Agreement, Purchaser shall deliver to Seller the Additional Purchase
Price on the Option Closing Date at the offices of Cleary, Gottlieb, Steen &
Hamilton, New York, New York 10006, or at such other place as shall be agreed
upon by Purchaser and Seller, paid by wire transfer of Federal (immediately
available same-day) funds to an account designated by Seller, against delivery
by Seller to the Collateral Agent of the additional number of shares of Common
Stock and/or cash, securities and other property necessary to comply with
Seller's obligations under the Collateral Agreement.
(c) Delivery of Contract Shares.
---------------------------
(i) Seller agrees to deliver the Contract Shares to Purchaser on the
Exchange Date. Seller shall be deemed to have instructed the Collateral
Agent to deliver to the Custodian, for the account of Purchaser, shares of
Common Stock then held by the Collateral Agent as collateral under the
Collateral Agreement, in an amount equal to the number of Contract Shares,
rounded down to the nearest whole number. Instead of any fractional shares
of Common Stock that would otherwise be deliverable (prior to rounding) to
Purchaser at the Exchange Date, Seller agrees to make a cash payment in
respect of such fractional shares of Common Stock in an amount equal to the
value thereof at the Exchange Price. Notwithstanding the foregoing, if an
Adjustment Event shall have occurred prior to the Exchange Date then, in
lieu of the foregoing, Seller shall
8
<PAGE>
be deemed to have instructed: (A) in the case of any cash required to be
delivered on the Exchange Date as provided in Section 6.2, the Collateral
Agent to wire transfer Federal (immediately available same-day) funds to an
account designated by Purchaser; and (B) in the case of any Reported
Securities required to be delivered by Seller in lieu of cash as provided
in Section 6.2, the Collateral Agent to deliver to the Custodian, for the
account of Purchaser, a specified number of Reported Securities then held
as collateral under the Collateral Agreement, as provided in Section 6(g)
of the Collateral Agreement.
(ii) [In the event that by the Exchange Date any substitute collateral
has not been replaced by shares of Common Stock (and/or, after an
Adjustment Event, cash or Reported Securities) sufficient to meet Seller's
obligations hereunder, delivery shall be effected by delivery by the
Collateral Agent to the Custodian, for the account of Purchaser, of the
market value of the shares of Common Stock required to be delivered
hereunder, in the form of any shares of Common Stock then pledged by Seller
plus cash generated from the liquidation of U.S. Government obligations
then pledged by Seller (and/or, after an Adjustment Event, the market value
of the alternative consideration required to be delivered hereunder, in the
form of any Reported Securities then pledged, plus any cash then pledged,
plus cash generated from the liquidation of U.S. Government obligations
then pledged). In such event, Seller shall be deemed to have instructed
the Collateral Agent to liquidate and turn into cash the U.S. Government
obligations then pledged by Seller to the extent necessary to satisfy
Seller's obligations hereunder.]
(iii) Certificates representing Common Stock (or Reported Securities)
in registered form that are part of the Contract Shares shall be registered
in Purchaser's name or in the name of a depositary or a nominee of a
depositary as requested by Purchaser, unless such Common Stock (and/or
Reported Securities) is represented by one or more global certificates
registered in the name of a depositary or a nominee of a depositary or are
book entry securities, in which event Purchaser's interest in such
securities shall be noted in a manner satisfactory to Purchaser and its
counsel.
(iv) Seller's right to deliver (or cause to be delivered) to Purchaser
hereunder Common Stock and Reported Securities shall be conditioned upon
such Common Stock and Reported Securities to be so delivered being
transferable (i) by Seller to Purchaser in accordance with the provisions
hereof and in accordance with the terms of any agreement among shareholders
applicable to such Common Stock or Reported Securities, and (ii) by
Purchaser, following receipt from Seller, without any restrictions not
generally applicable to all holders of such Common Stock or Reported
Securities, as the case may be. If the conditions set forth in the
preceding sentence shall not be satisfied with respect to any Common Stock
or Reported Securities to be delivered by Seller, then, notwithstanding the
provisions hereof, Seller shall exercise the Cash Delivery Option.
(d) Cash Delivery Option. At its option, Seller may deliver to
--------------------
Purchaser on the Exchange Date, in lieu of the Contract Shares, an amount in
cash equal to, subject to adjustment as provided in Section 6.2, the Exchange
Price of the Contract Shares (the "Cash Delivery Option"), paid by wire transfer
--------------------
to an account designated by Purchaser, in Federal (immediately available same-
day) funds; provided that in connection with a Rollover Offering which is
consummated and as to which Seller has duly elected the Cash Delivery Option and
has
9
<PAGE>
duly made a Rollover Offering Election, such cash payment shall be made no later
than the fifth Business Day after the Exchange Date. Seller may elect the Cash
Delivery Option in respect of all, but not less than all, Contract Shares and
may do so by notice to Purchaser, the Collateral Agent and the Custodian not
less than 25 Business Days prior to the Exchange Date. If Seller elects the Cash
Delivery Option and so notifies Purchaser, Purchaser shall promptly notify The
Depository Trust Company and publish a notice in a daily newspaper of national
circulation stating whether the holders of DECS will receive shares of Common
Stock, cash or a combination thereof (and specifying whether any such cash
settlement is being made in connection with a Rollover Offering) and, if a
combination of Common Stock and cash, the relative proportion of each.
(e) Rollover Offering Election. The provisions of Sections 1.3(f)
--------------------------
and (g) shall be applicable if the Seller has made a Rollover Offering Election
by written notice given to the Purchaser not earlier than , 2002 and
not later than , 2002. Any Rollover Offering Election (i) shall be
irrevocable once made, (ii) may be made only if the Seller has also elected, or
simultaneously elects, the Cash Delivery Option, (iii) shall be effective only
if each Seller electing the Cash Delivery Option (as defined in the forward
purchase agreements dated as of the date hereof between such Sellers and the
Purchaser) also makes a Rollover Offering Election pursuant to such forward
purchase agreements (each such other seller, an "Other Rollover Seller") and
---------------------
(iv) may be made only as to all, but not less than all, Contract Shares.
(f) Extension of Exchange Date. At its option, Seller may, by notice
--------------------------
given to Purchaser not earlier than , 2002 and not later than , 2002, elect to
extend the Exchange Date to , 2002, provided that such extension shall be
effective (i) only in connection with a Rollover Offering as to which the Seller
shall have duly made a Rollover Offering Election, (ii) only if Seller shall
have delivered to the Collateral Agent, in pledge under the Collateral Agreement
direct obligations of the United States of America which through the scheduled
payment of principal and interest in accordance with their terms will provide,
not later than one Business Day before , 2002, money in an amount equal to not
less than the product of (1) $______ [the aggregate interest due on all Initial
DECS for the maximum extension period] and (2) a fraction, the numerator of
which is the sum of the Firm Share Base Amount and the Additional Share Base
Amount and the denominator of which is the number of Initial DECS (the
"Additional Government Securities") and (iii) only if each Other Rollover
- ---------------------------------
Seller, if any, has previously or simultaneously elected to extend the Exchange
Date (as such term is defined in the forward purchase agreement dated as of the
date hereof between such Other Seller and the Purchaser) to the same date as is
elected by the Seller hereunder. Unless Seller has duly elected, in connection
with a Rollover Offering, to accelerate the Exchange Date in accordance with
Section 1.3(g) hereof, Seller shall on such extended Exchange Date pay to
Purchaser by wire transfer of Federal (immediately available same-day) funds an
amount equal to not less than the product of (1) $_______ [ the aggregate
interest payable for the 3-month extension period on the Initial DECS] and (2) a
fraction, the numerator of which is the sum of the Firm Share Base Amount and
the Additional Share Base Amount and the denominator of which is the number of
Initial DECS.
In addition, Seller hereby covenants and agrees to take all other
actions necessary to cause Purchaser to be a protected purchaser of such
Additional Government Securities, within the meaning of Article 8 of the New
York Uniform Commercial Code, as amended.
10
<PAGE>
If Seller elects to extend the Exchange Date and so notifies
Purchaser, Purchaser shall promptly notify the Depository Trust Company and
publish a notice in a daily newspaper of national circulation stating that the
Seller has elected to extend the Exchange Date.
(g) Acceleration of Exchange Date. At any time after the Exchange
-----------------------------
Date has been extended pursuant to Section 1.3(f) hereof, Seller may, at its
option but only in connection with the consummation of a Rollover Offering,
accelerate the Exchange Date to any date on or after , 2002, by notice to
Purchaser not later than a.m. on the date to which the Exchange Date is
accelerated; provided that such acceleration shall be effective only if (i) each
Other Seller, if any, has previously or simultaneously elected to accelerate the
Exchange Date (as such term is defined in the forward purchase agreement dated
as of the date hereof between such Other Seller and the Purchaser), and (ii) at
or prior to a.m. on such accelerated Exchange Date, Seller has paid to
Purchaser, by wire transfer to an account designated by Purchaser, in Federal
(immediately available same-day) funds, an amount equal to not less than the
product of (1) $____________ [the aggregate interest payable for the extension
period on the Initial DECS per day] times the number of days in the period from
-----
(and including) , 2002 to (but excluding) the Exchange Date as accelerated,
calculated on the basis of a 360 day year consistency of twelve 30-day months
and (2) a fraction, the numerator of which is the sum of the Firm Share Base
Amount and the Additional Share Base Amount and the denominator of which is the
number of Initial DECS.
If Seller elects to accelerate the Exchange Date and so notifies
Purchaser, Purchaser shall provide notice of such election to the holders of the
DECS not later than the accelerated Exchange Date.
(h) Seller represents, and Purchaser acknowledges, that it is Seller's
current intention to deliver Contract Shares to the Purchaser on the Exchange
Date and not to exercise the Cash Delivery Option; however, Seller intends to
consider all relevant economic, market and business factors in ultimately
determining whether to deliver Contract Shares on the Exchange Date or to
exercise the Cash Delivery Option.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
(a) Seller represents and warrants to Purchaser that each
representation and warranty made by Seller in Section 3 of the Underwriting
Agreement is true and correct on the date hereof.
(b) Seller further represents that:
[Note: Further representations and warranties to come, if
appropriate, based on limitations on Seller(s) as single purpose vehicle,
etc.]
11
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
Purchaser represents and warrants to Seller that:
(a) each representation and warranty made by Purchaser in Section 1
of the Underwriting Agreement is true and correct on the date hereof ; and
(b) it acknowledges that the Common Stock delivered pursuant to this
Agreement and the Collateral Agreement may contain one or more of the type of
legends referred to in Section 3(e) of the Collateral Agreement (which legend
(i) will not be applicable to the delivery of any such Common Stock to the Trust
pursuant to this Agreement and the Collateral Agreement or to the delivery of
any such Common Stock by the Trust to the holders of DECS pursuant to the DECS
and (ii) will be removed at the request of the Collateral Agent to the transfer
agent for the Common Stock prior to any such delivery to holders of DECS).
ARTICLE IV
CONDITIONS TO PURCHASER'S OBLIGATIONS
-------------------------------------
(a) The obligation of Purchaser to deliver the Firm Purchase Price on
the Firm Payment Date is subject to the satisfaction of the following
conditions:
(i) the purchase by the Underwriters of the Initial DECS pursuant to
the Underwriting Agreement shall have been consummated as contemplated
under the Underwriting Agreement;
(ii) the representations and warranties of the Seller contained in
Article II hereof shall be true and correct as of the Firm Payment Date;
(iii) the Collateral Agreement shall have been executed by the Seller
and the delivery of the Collateral thereunder shall have been made; and
(iv) each Other Seller shall have executed and delivered a forward
purchase contract dated as of the date hereof between such Other Seller and
Purchaser;
(v) each Other Seller shall have executed and delivered a collateral
agreement dated as of the date hereof among such Other Seller, the
Purchaser and the collateral agent;
(vi) the Reimbursement Agreement shall have been executed by the
Sellers.
(b) The obligation of Purchaser to deliver the Additional Purchase
Price on the Option Closing Date is subject to the satisfaction of the following
conditions:
12
<PAGE>
(i) the purchase by the Underwriters of the Additional DECS pursuant
to the Underwriting Agreement shall have been consummated as contemplated
under the Underwriting Agreement;
(ii) the representations and warranties of the Seller contained in
Article II hereof shall be true and correct as of the Option Closing Date;
and
(iii) the delivery of any additional Collateral under the Collateral
Agreement shall have been made.
ARTICLE V
COVENANTS
---------
5.1 Taxes. Seller shall pay any and all documentary, stamp, transfer
-----
or similar taxes and charges that may be payable in respect of the entry into
this Agreement and the transfer and delivery of the Contract Shares, cash or
Reported Securities pursuant hereto.
5.2 Forward Purchase Contract. Each of Purchaser and Seller hereby
-------------------------
agrees that
(a) it will treat this Agreement in its entirety as a forward purchase
contract for the delivery of the Contract Shares on the Exchange Date (including
as a result of acceleration or otherwise) (the "Forward Purchase Contract
Characterization"), under the terms of which contract (i) at the time of
issuance of the DECS Purchaser deposits irrevocably with Seller a fixed amount
of cash equal to the Firm Purchase Price (plus, if the Underwriters exercise
their option to purchase Additional DECS, the Additional Purchase Price) to
assure the fulfillment of Purchaser's purchase obligation described in clause
(ii) below, which deposit will unconditionally and irrevocably be applied at the
Exchange Date to satisfy such obligation and (ii) at the Exchange Date such cash
deposit unconditionally and irrevocably will be applied by Seller in full
satisfaction of Purchaser's obligation under the forward purchase contract, and
Seller will deliver to Purchaser the number of Contract Shares that Purchaser is
entitled to receive at that time pursuant to the terms of this Agreement
(subject to Seller's right to deliver cash and/or other property as provided in
this Agreement in lieu of the Contract Shares);
(b) it will treat, consistent with the above characterization, amounts
paid to Seller in respect of this Agreement as allocable in their entirety to
the amount of the cash deposit attributable to such Agreement;
(c) it will not treat this Agreement, any portion of this Agreement or
any obligation hereunder as giving rise to any interest income or other
inclusions of ordinary income (in the case of Purchaser) or as giving rise to
any interest expense or other deductions of ordinary expense (in the case of
Seller);
13
<PAGE>
(d) it will not treat the delivery of any portion of the Contract
Shares, cash or Reported Securities to be delivered pursuant to this Agreement
as the payment of interest or ordinary income; and
(e) it will not take any action (including filing any tax return or
form or taking any position in any tax proceeding) that is inconsistent with the
obligations contained in clauses (a) through (d), unless such action or position
is required by an applicable taxing authority or unless such action or position
is required by a change in statutory law or regulation or by a judicial or other
authoritative interpretation of the law enacted, promulgated or published after
the date of this Agreement.
5.3 Limitations on Trading During Certain Days. Seller hereby agrees
------------------------------------------
that it will not, and will cause each of its Affiliates that is under its
control not to, buy or sell shares of Common Stock of the Company or Reported
Securities for its own account during the 60 days prior to the Exchange Date.
5.4 Notices. Seller will cause to be delivered to Purchaser:
-------
(a) Immediately upon the occurrence of any Event of Default hereunder
or under the Collateral Agreement; and
(b) In case at any time prior to the Exchange Date Seller receives
notice, or otherwise obtains knowledge, that any event requiring that an
adjustment be effected pursuant to Article VI hereof shall have occurred or be
pending, then Seller shall promptly cause to be delivered to Purchaser a notice
identifying such event and stating, if known to Seller, the date on which such
event is to occur and, if applicable, the record date relating to such event.
Seller shall cause further notices to be delivered to Purchaser if Seller shall
subsequently receive notice, or shall otherwise obtain knowledge, of any further
or revised information regarding the terms or timing of such event or any record
date relating thereto.
5.5. Affirmative Covenants. During the term of this Agreement,
---------------------
Seller covenants and agrees that it will:
(a) Comply in all material respects with all applicable laws, rules,
regulations and orders to the extent noncompliance would have a material adverse
effect on the ability of any Seller to perform its obligations hereunder or
under the Collateral Agreement, such compliance to include, without limitation,
paying before the same become delinquent all taxes, assessments and governmental
charges imposed upon Seller or upon Seller's property, including the collateral
pledged under the Collateral Agreement, except to the extent contested in good
faith.
(b) Furnish to Purchaser as soon as possible and in any event within
twenty calendar days after Seller shall become aware of the occurrence of any
failure by Seller to comply with or perform any agreement or obligation
contained in this Agreement or the Collateral Agreement, a statement of Seller
describing such failure and setting forth details of such failure and the action
which Seller has taken and proposes to take with respect thereto.
5.6 Negative Covenants of Seller. During the term of this Agreement,
----------------------------
Seller will not:
14
<PAGE>
[Note: Covenants to come, if appropriate, based on limitations on
Seller(s) as single purpose vehicle, etc.]
5.7 Further Assurances. From time to time on and after the date
------------------
hereof through the Exchange Date (or, if later, the date on which this Agreement
has been fully performed), each of the parties hereto shall use its reasonable
best efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper and advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement in accordance with the terms and conditions hereof, including (i)
using reasonable best efforts to remove any legal impediment to the consummation
of such transactions and (ii) the execution and delivery of all such deeds,
agreements, assignments and further instruments of transfer and conveyance
necessary, proper or advisable to consummate and make effective the transactions
contemplated by the Agreement in accordance with the terms and conditions
hereof.
ARTICLE VI
ADJUSTMENT OF EXCHANGE RATE, EXCHANGE PRICE AND CLOSING PRICE
-------------------------------------------------------------
6.1 Dilution Adjustments. The Exchange Rate, Exchange Price and
--------------------
Closing Price shall be subject to adjustment successively from time to time as
follows:
(a) Stock Dividends, Splits, Reclassifications, Etc. If the Company
-----------------------------------------------
shall, after the date hereof,
(i) pay a stock dividend or make a distribution, in either case, with
respect to Common Stock in shares of such stock;
(ii) subdivide or split its outstanding shares of Common Stock into a
greater number of shares;
(iii) combine its outstanding shares of Common Stock into a smaller
number of shares; or
(iv) issue by reclassification (other than a reclassification pursuant
to clause (b), (c), (d) or (e) of the definition of Adjustment Event) of
its shares of Common Stock any other equity securities of the Company;
then, in each such case, the Exchange Rate shall be multiplied by a Dilution
Adjustment equal to the number of shares of common stock (or the fraction
thereof) that a holder who held one share of Common Stock immediately prior to
such event would be entitled solely by reason of such event to hold immediately
after such event. In the case of the reclassification of any shares of Common
Stock into any other equity securities of the Company other than the Common
Stock, such other equity securities shall be deemed shares of Common Stock for
all purposes hereunder. The Exchange Price and Closing Price shall also be
adjusted in the manner described in paragraph (c).
15
<PAGE>
(b) Right or Warrant Issuances. If the Company shall, after the date
--------------------------
hereof, issue, or declare a record date in respect of an issuance of, rights or
warrants (other than rights to purchase Common Stock pursuant to a plan for the
reinvestment of dividends or interest) to all holders of Common Stock entitling
them to subscribe for or purchase shares of Common Stock at a price per share
less than the Market Price of the Common Stock on the Business Day next
following the record date for the determination of holders of Common Stock
entitled to receive such rights or warrants, then, in each such case, the
Exchange Rate shall be multiplied by the following Dilution Adjustment: a
fraction, of which the numerator shall be (A) the number of shares of Common
Stock outstanding on the record date for the issuance of such rights or warrants
plus (B) the number of additional shares of Common Stock offered for
subscription or purchase pursuant to such rights or warrants, and of which the
denominator shall be (x) the number of shares of Common Stock outstanding on the
record date for the issuance of such rights or warrants plus (y) the number
specified in clause (B) above multiplied by the quotient of the exercise price
of such rights or warrants divided by the Market Price of the Common Stock on
the Business Day next following the record date for the determination of holders
of Common Stock entitled to receive such rights or warrants. To the extent that
such rights or warrants expire prior to the Exchange Date and shares of Common
Stock are delivered with respect to less than all of such rights or warrants
prior to such expiration, the Exchange Rate shall be readjusted to the Exchange
Rate which would then be in effect had such adjustments for the issuance of such
rights or warrants been made upon the basis of delivery of only the number of
shares of Common Stock actually delivered pursuant to such rights or warrants.
The Exchange Price and Closing Price shall also be adjusted in the manner
described in paragraph (c).
(c) Corresponding Adjustments to Exchange Price; Adjustment of Closing
------------------------------------------------------------------
Price in Certain Circumstances.
- ------------------------------
(i) If any adjustment is made to the Exchange Rate pursuant to
paragraph (a) or (b) of this Section 6.1, an adjustment shall also be made
to the Exchange Price as such term is used throughout the definition of
Exchange Rate. The required adjustment to the Exchange Price shall be made
at the Exchange Date by multiplying the Exchange Price by the cumulative
Dilution Adjustment.
(ii) If, during any Calculation Period used in calculating the
Exchange Price, the Market Price or the Transaction Value, there shall
occur any event requiring an adjustment to be effected pursuant to this
Section 6.1, then the Closing Price for each Trading Day in the Calculation
Period occurring prior to the day on which such adjustment is effected
shall be adjusted by being divided by the relevant Dilution Adjustment.
(d) Timing of Dilution Adjustments. Each Dilution Adjustment shall be
------------------------------
effected:
(i) in the case of any dividend, distribution, or issuance of rights
or warrants, at the opening of business on the Business Day next following
the record date for determination of holders of Common Stock entitled to
receive such dividend, distribution or issuance or, if the announcement of
any such dividend, distribution or issuance is after
16
<PAGE>
such record date, at the time such dividend, distribution or issuance shall
be announced by the Company; and
(ii) in the case of any subdivision, split, combination or
reclassification, on the effective date of such transaction.
(e) General; Failure of Dilution Event to Occur. All Dilution
-------------------------------------------
Adjustments shall be rounded upward or downward to the nearest 1/10,000th (or if
there is not a nearest 1/10,000th to the next higher 1/10,000th). No adjustment
in the Exchange Rate shall be required unless such adjustment would require an
increase or decrease of at least one percent therein; provided, however, that
any adjustments which by reason of this sentence are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
If any announcement or declaration of a record date in respect of a dividend,
distribution or issuance requiring an adjustment pursuant to this Section 6.1
shall subsequently be canceled by the Company, or such dividend, distribution or
issuance shall fail to receive requisite approvals or shall fail to occur for
any other reason, then, upon such cancellation, failure of approval or failure
to occur, the Exchange Rate shall be readjusted to the Exchange Rate which would
then have been in effect had adjustment for such event not been made. If an
Adjustment Event shall occur after the occurrence of one or more events
requiring an adjustment pursuant to this Section 6.1, the Dilution Adjustments
previously applied to the Exchange Rate in respect of such events shall not be
rescinded but shall be applied to the new Exchange Rate provided for under
Section 6.2.
6.2 Adjustment for Consolidation, Merger or Other Adjustment Event.
--------------------------------------------------------------
In the event of (a) any dividend or distribution by the Company to all holders
of Common Stock of evidences of its indebtedness or other assets (excluding any
dividends or distributions referred to in Section 6.1(a)(i), any other equity
securities issued pursuant to a reclassification referred to in Section
6.1(a)(iv) and any Ordinary Cash Dividends) or any issuance by the Company to
all holders of Common Stock of rights or warrants to subscribe for or purchase
any of its securities (other than rights or warrants referred to in Section
6.1(b)), (b) any consolidation or merger of the Company with or into another
entity (other than a merger or consolidation in which the Company is the
continuing corporation and in which the Common Stock outstanding immediately
prior to the merger or consolidation is not exchanged for cash, securities or
other property of the Company or another corporation), (c) any sale, transfer,
lease or conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety, (d) any statutory exchange of
securities of the Company with another corporation (other than in connection
with a merger or acquisition) or (e) any liquidation, dissolution or winding up
of the Company (any such event described in clause (a), (b), (c), (d) or (e), an
"Adjustment Event"), the Exchange Rate shall be adjusted so that on the Exchange
----------------
Date Seller shall deliver to Purchaser, in lieu of or (in the case of an
Adjustment Event described in clause (a) above) in addition to, the Contract
Shares, cash in an amount equal to:
(A) if the Exchange Price is greater than the Threshold Appreciation
Price, multiplied by the Transaction Value (as defined below);
17
<PAGE>
(B) if the Exchange Price is less than or equal to the Threshold
Appreciation Price but greater than the Initial Price, the product of
(x) the Initial Price divided by the Exchange Price multiplied by (y)
the Transaction Value; and
(C) if the Exchange Price is less than or equal to the Initial Price, the
Transaction Value;
provided, however, that if the consideration received by all holders
-------- -------
of Common Stock in such Adjustment Event does not and may not at the option of
such holders include Reported Securities, then (except in the case of an
Adjustment Event solely of the type described in clause (a) above) (i) Seller's
delivery obligations hereunder will be accelerated and promptly upon
consummation of the Adjustment Event Seller will be required to deliver to
Purchaser cash in an amount equal to (x) if the Transaction Value is greater
than the Threshold Appreciation Price, multiplied by the Transaction Value,
(y) if the Transaction Value is less than or equal to the Threshold Appreciation
Price but greater than Initial Price, the Initial Price, and (z) if the
Transaction Value is less than or equal to the Initial Price, the Transaction
Value.
Following an Adjustment Event, the Exchange Price, as such term is
used throughout the definition of Exchange Rate, shall be deemed to equal (A) if
shares of Common Stock are outstanding at the Exchange Date, the Exchange Price
of the Common Stock, as adjusted pursuant to Section 6.1(c), otherwise zero,
plus (B) the Transaction Value.
Notwithstanding the foregoing, with respect to any Reported Securities
(as defined below) received by holders of Common Stock in an Adjustment Event,
Seller shall, in lieu of delivering cash in respect of such Reported Securities
as described above, deliver a number of such Reported Securities with a value,
as determined in accordance with clause (ii) of the definition of Transaction
Value, equal to all cash amounts that would otherwise be deliverable in respect
of Reported Securities received in such Adjustment Event, unless Seller has made
an election to exercise the Cash Delivery Option or such Reported Securities
have not yet been delivered to the holders entitled thereto following such
Adjustment Event or any record date with respect thereto. If, following any
Adjustment Event, any Reported Security ceases to qualify as a Reported
Security, then (x) Seller shall not deliver such Reported Security but instead
shall deliver of an equivalent amount of cash and (y) notwithstanding clause
(ii) of the definition of Transaction Value, the Transaction Value of such
Reported Security shall mean the fair market value of such Reported Security on
the date such security ceases to qualify as a Reported Security, as determined
by a nationally recognized investment banking firm retained for this purpose by
the Administrator.
"Transaction Value" means (i) for any cash received in any Adjustment
-----------------
Event, the amount of cash received per share of Common Stock, (ii) for any
Reported Securities received in any Adjustment Event, an amount equal to (x) the
average Closing Price per security of such Reported Securities on the 20 Trading
Days immediately prior to (but not including) the Exchange Date multiplied by
(y) the number of such Reported Securities (as adjusted pursuant to the
definition thereof) received per share of Common Stock and (iii) for any
property received in any Adjustment Event other than cash or Reported
Securities, an amount equal to the fair market value of the property received
per share of Common Stock on the date such property is received, as determined
by a nationally recognized investment banking firm retained for this purpose by
18
<PAGE>
the Administrator; provided, however, that in the case of clause (ii), (x) with
respect to securities that are Reported Securities by virtue of only clause (iv)
of the definition of Reported Securities, Transaction Value with respect to any
such Reported Security means the average of the mid-point of the last bid and
ask prices for such Reported Security as of the Exchange Date from each of at
least three nationally recognized investment banking firms retained for such
purpose by the Administrator multiplied by the number of such Reported
Securities (as adjusted pursuant to the definition thereof) received per share
of Common Stock and (y) with respect to all other Reported Securities, if there
are not 20 Trading Days for any particular Reported Security occurring after the
60th calendar day immediately prior to, but not including, the Exchange Date,
Transaction Value with respect to such Reported Security means the fair market
value per security of such Reported Security as of the Exchange Date as
determined by a nationally recognized investment banking firm retained for such
purpose by the Administrator multiplied by the number of such Reported
Securities (as adjusted pursuant to the definition thereof) received per share
of Common Stock. For purposes of calculating the Transaction Value, any cash,
Reported Securities or other property receivable in an Adjustment Event shall be
deemed to have been received immediately prior to the close of business on the
record date for such Adjustment Event or, if there is no record date for such
Adjustment Event, immediately prior to the close of business on the effective
date of such Adjustment Event.
"Reported Securities" means any securities received in an Adjustment
-------------------
Event that (A) are (i) listed on a United States national securities exchange,
(ii) reported on a United States national securities system subject to last sale
reporting, (iii) traded in the over-the-counter market and reported on the
National Quotation Bureau or similar organization or (iv) for which bid and ask
prices are available from at least three nationally recognized investment
banking firms and (B) are either (x) perpetual equity securities or (y) non-
perpetual equity or debt securities with a stated maturity after the Exchange
Date. The number of shares of any Reported Securities included in the
calculation of Transaction Value pursuant to clause (ii) of the definition
thereof shall be subject to adjustment if any event that would, had it occurred
with respect to the Common Stock or the Company, have required an adjustment
pursuant to Section 6.1 or 6.2, shall occur with respect to such Reported
Securities or the issuer thereof subsequent to the date the Adjustment Event is
consummated. Adjustment for such subsequent events shall be as nearly
equivalent as practicable to the adjustments provided for in Section 6.1 or 6.2,
as applicable.
ARTICLE VII
ACCELERATION
------------
If one or more of the following events (each an "Event of Default")
----------------
shall occur:
(a) Seller or any Other Seller shall commence a voluntary case or
other proceeding seeking a liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or
19
<PAGE>
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall take any action to authorize any of
the foregoing;
(b) an involuntary case or other proceeding shall be commenced against
Seller or any Other Seller seeking liquidation, reorganization or other relief
with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property; or an order for relief shall be entered
against any Seller or any Other Seller under the federal bankruptcy laws as now
or hereafter in effect; or
(c) a Collateral Event of Default within the meaning of the Collateral
Agreement;
then an "Acceleration Date" shall occur, Seller's rights under Section
-----------------
1.3(d), (e) (f) and (g) shall terminate immediately and (i) in the case of
clause (c), Seller shall become obligated to the extent permitted by law to
deliver to Purchaser (and shall be deemed to instruct the Collateral Agent
to deliver to the Custodian, for the account of Purchaser, and to liquidate
and turn into cash the U.S. Government obligations then pledged by Seller
to the extent necessary to satisfy such obligation) the Contract Shares, in
the form of the shares of Common Stock then pledged by Seller, or cash
generated from the liquidation of U.S. Government obligations then pledged
by Seller, or a combination thereof (or, after an Adjustment Event, the
alternate consideration to be delivered, in the form of Reported Securities
then pledged, cash then pledged, cash generated from the liquidation of
U.S. Government obligations then pledged, or a combination thereof); or
(ii) in the case of clauses (a) or (b), Seller shall become obligated
to the extent permitted by law to deliver to Purchaser (and shall be deemed
to instruct the Collateral Agent to deliver to the Custodian, for the
account of Purchaser, and to liquidate and turn into cash the U.S.
Government obligations then pledged by Seller to the extent necessary to
satisfy such obligation) a number of shares of Common Stock, in the form of
the shares of Common Stock then pledged by Seller, or cash generated from
the liquidation of U.S. Government obligations then pledged by Seller, or a
combination thereof (or, after an Adjustment Event, the alternate
consideration to be delivered, in the form of Reported Securities then
pledged, cash then pledged, cash generated from the liquidation of U.S.
Government obligations then pledged, or a combination thereof), with an
aggregate value (based on the Closing Price on the Acceleration Date) equal
to the Acceleration Value (as defined below).
"Acceleration Value" means an amount determined by the Administrator
------------------
on the basis of quotations from Independent Dealers (as defined below). Each
quotation will be for an amount that would be paid to the relevant Independent
Dealer in consideration of an agreement between Purchaser and such Independent
Dealer that would have the effect of preserving for Purchaser the economic
equivalent of the payments and deliveries that Purchaser would, but for the
occurrence of the Acceleration Date, have been entitled to receive after the
Acceleration Date hereunder (taking into account any adjustments to the Exchange
Rate that may have been effected on or prior to the Acceleration Date). On or
as soon as reasonably practicable following
20
<PAGE>
the Acceleration Date, the Administrator will request each Independent Dealer to
provide its quotation as soon as reasonably practicable, but in any event within
two Business Days. The Administrator shall compute the Acceleration Value upon
receipt of each Independent Dealer's quotation, provided that if, at the close
of business on the fourth Business Day following the Acceleration Date, the
Administrator shall have received quotations from fewer than four of the
Independent Dealers, the Administrator shall compute the Acceleration Value
using the quotations, if any, it shall have received at or prior to such time.
If four quotations are provided, the Acceleration Value will be the arithmetic
mean of the two quotations remaining after disregarding the highest and lowest
quotations. (For this purpose, if more than one quotation has the same highest
or lowest value, then one of such quotations shall be disregarded.) If two or
three quotations are provided, the Acceleration Value will be the arithmetic
mean of such quotations. If one quotation is provided, the Acceleration Value
will be equal to such quotation. If no quotations are provided, the Acceleration
Value will be the aggregate value (based on the Closing Price on the
Acceleration Date) of the number of shares of Common Stock (or, after an
Adjustment Event, Reported Securities, cash or a combination thereof) that would
be required to be delivered hereunder on the Acceleration Date if the Exchange
Date were redefined to be the Acceleration Date.
"Independent Dealers" means four nationally recognized independent
-------------------
investment banking firms selected in good faith by the Administrator.
As promptly as reasonably practicable after receipt of the quotations
on which the Acceleration Value is based (or, as the case may be, after failure
to receive any such quotations within the time period prescribed above),
Purchaser shall deliver to Seller and the Collateral Agent a notice specifying
the number of shares of Common Stock (or, after an Adjustment Event, the
alternate consideration) required to be delivered by Seller. Purchaser and
Seller agree that the obligations contained in clauses (i) and (ii) above are a
reasonable pre-estimate of loss and not a penalty. Such amount is payable for
the loss of bargain and Purchaser will not be entitled to recover additional
damage as a consequence of loss resulting from an Event of Default.
ARTICLE VIII
------------
MISCELLANEOUS
-------------
8.1 Adjustments; Selection of Independent Investment Banking Firm.
-------------------------------------------------------------
Purchaser shall be responsible for the effectuation and calculation of any
adjustment pursuant to Article VI hereof and shall furnish Seller notice of any
such adjustment and shall provide Seller reasonable opportunity to review the
calculations pertaining to any such adjustment. If, pursuant to the terms and
conditions hereof, the Administrator shall be required to retain a nationally
recognized independent investment banking firm for any purpose provided herein,
such nationally recognized independent investment banking firm shall be selected
and retained by the Administrator only after consultation with Seller; provided,
however, that Seller shall be deemed to have waived his right to consult if
Seller fails to consult within five Business Days of notice being sent by the
Administrator to Seller seeking consultation. Purchaser may delegate the
effectuation and calculation of any such adjustments to its Administrator.
21
<PAGE>
8.2 Notices. Notices to Purchaser shall be directed to it in care of
-------
the Administrator for Purchaser, The Bank of New York, 101 Barclay Street, New
York, New York 10286, Telephone: (212) 816-5228, Telecopier: (212) 816-7157;
notices to Seller shall be directed to . Notwithstanding the foregoing, notices
to a party shall be directed to such other address for such party as shall be
specified by such party in a like notice given pursuant to this Section 8.2.
All notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if either (i) personally delivered (including
delivery by courier service or by Federal Express or any other nationally
recognized overnight delivery service for next day delivery) to the offices
specified in the preceding sentence, in which case they shall be deemed received
on the first Business Day by which delivery shall have been made to said
offices; or (ii) sent by certified mail, return receipt requested, in accordance
with the preceding sentence, in which case they shall be deemed received when
receipted for unless acknowledgment is refused (in which case delivery shall be
deemed to have been received on the first Business Day on which such
acknowledgment is refused). Any notice, demand or other communication to be
provided by or on behalf of Purchaser pursuant to this Agreement shall be sent
to the address of Seller, provided in this Section 8.2. Any failure by Seller
or any guardian, conservator, executor, administrator or other similarly
appointed person to receive any such notice, demand or communication shall in no
way abrogate, invalidate or otherwise affect the validity or enforceability of
the notice, demand or communication or the matters set forth therein.
8.3 Counterparts. This Agreement may be signed in any number of
------------
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
8.4 Entire Agreement. Except as expressly set forth herein, this
----------------
Agreement constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes all prior agreements, understandings and
negotiations, both written and oral, among the parties with respect to the
subject matter of this Agreement.
8.5 Amendments; Waivers. Any provision of this Agreement may be
-------------------
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Purchaser and Seller, or, in the case of
a waiver, by the party or parties against whom the waiver is to be effective.
No failure or delay by either party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
8.6 No Third Party Rights; Successors and Assigns. Except as
---------------------------------------------
otherwise agreed in writing, this Agreement is not intended and shall not be
construed to create any rights in any person other than Seller and Purchaser and
their respective successors and assigns and no person shall assert any rights as
third party beneficiary hereunder. Whenever any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
permitted assigns of such party.
This Agreement will be binding on and enforceable against the Seller
despite the death or legal incapacity of any settlor or beneficiary of such
Seller.
22
<PAGE>
8.7. Application of Bankruptcy Code. The parties hereto acknowledge
------------------------------
and agree that the Collateral Agent is a "financial institution" within the
meaning of Section 101(22) of Title 11 of the United States Code (the
"Bankruptcy Code") and is acting as agent and custodian for Purchaser in
- ----------------
connection with this Agreement and that Purchaser is a "customer" of the
Collateral Agent within the meaning of said Section 101(22). The parties hereto
further acknowledge and agree that this Agreement is a "securities contract", as
such term is defined in Section 741(7) of the Bankruptcy Code, entitled to the
protection of Section 555 of the Bankruptcy Code.
8.8 Governing Law; Jurisdiction; Severability; Waiver of Jury Trial.
---------------------------------------------------------------
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York. For the purpose of any suit, action or proceeding
arising out of or relating to this Agreement, the parties hereto hereby
expressly and irrevocably consent and submit to the non-exclusive jurisdiction
of any United States Federal or New York State court sitting in the Borough of
Manhattan, City and State of New York, and expressly and irrevocably waive, to
the extent permitted under applicable law, any immunity from the jurisdiction
thereof and any claim or defense in such suit, action or proceeding based on a
claim of improper venue, forum non conveniens or any similar basis to which it
might otherwise be entitled. To the extent permitted by law, the
unenforceability or invalidity of any provision or provisions of this Agreement
shall not render any other provision or provisions herein contained
unenforceable or invalid. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
PARTIES HERETO HEREBY WAIVE AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS
PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN
RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR
BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR TORT OR OTHERWISE. EACH
PARTY HERETO ACKNOWLEDGES THAT IT OR HE HAS BEEN INFORMED BY THE OTHER PARTY
HERETO THAT THE PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL INDUCEMENT UPON
WHICH SUCH OTHER PARTY HERETO HAS RELIED, IS RELYING AND WILL RELY IN ENTERING
INTO THIS AGREEMENT AND ANY DOCUMENT RELATED THERETO. EACH PARTY HERETO MAY
FILE AN ORIGINAL COUNTERPART OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE
OF THE CONSENT OF THE OTHER PARTY HERETO TO THE WAIVER OF ITS OR HIS RIGHTS TO
TRIAL BY JURY.
23
<PAGE>
IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date and year first above written.
PURCHASER: SELLER:
DECS TRUST V:
By: By:
----------------------------- -----------------------------
Name: Name:
Title: Title:
24
<PAGE>
EXHIBIT (k)(4)
COLLATERAL AGREEMENT
Among
[ ],
As Pledgor,
THE BANK OF NEW YORK, As Collateral Agent
and
DECS TRUST V
Dated as of
[ ], 1999
<PAGE>
The following Table of Contents has been inserted for convenience of
reference only and does not constitute a part of the Collateral Agreement.
TABLE OF CONTENTS
SECTION
1. The Security Interests............................................ 1
2. Definitions....................................................... 2
3. Representations and Warranties of the Pledgor..................... 6
4. Representations and Warranties of the Collateral Agent............ 7
5. Certain Covenants of the Pledgor.................................. 7
6. Administration of the Collateral and Valuation of the Securities.. 9
7. Income and Voting Rights on Collateral............................ 14
8. Remedies upon Events of Default................................... 14
9. The Collateral Agent.............................................. 17
10. Miscellaneous.................................................... 19
11. Termination of Collateral Agreement.............................. 21
12. No Personal Liability of Trustees................................ 21
[Exhibit A - Certificate for Substituted Collateral]
Exhibit B - Certificate for Additional Government Securities
Exhibit C - Certificate for Additional Collateral
<PAGE>
COLLATERAL AGREEMENT
THIS COLLATERAL AGREEMENT (the "Agreement"), dated as of ,
---------
1999, among [ ], a [ ] organized under
the law of the State of Delaware (the "Pledgor"), The Bank of New York, a New
-------
York banking corporation, as collateral agent (the "Collateral Agent") hereunder
----------------
for the benefit of DECS Trust V, a statutory business trust organized under the
Business Trust Act of the State of Delaware (such trust and the trustees thereof
acting in their capacity as such being referred to herein as the "Trust" or
-----
"Purchaser"), and the Trust;
- ----------
W I T N E S S E T H:
WHEREAS, pursuant to the Forward Purchase Agreement (the "Purchase
--------
Agreement"), dated as of , 1999, between Pledgor and Purchaser,
- ---------
the Pledgor has agreed to sell and Purchaser has agreed to purchase Common
Stock, $.01 par value (the "Common Stock"), of Crown Castle International Corp.,
------------
a Delaware corporation (the "Company"), subject to the terms and conditions of
-------
the Purchase Agreement; and
NOW, THEREFORE, to secure the performance by the Pledgor of its
obligations under the Purchase Agreement and to secure the observance and
performance of the covenants and agreements contained herein and in the Purchase
Agreement, the parties hereto agree as follows:
1. The Security Interests.
----------------------
In order to secure the observance and performance of the covenants and
agreements contained herein and in the Purchase Agreement:
(a) Security Interests. The Pledgor hereby grants, sells, conveys,
------------------
assigns, transfers and pledges unto the Collateral Agent, as agent of and for
the benefit of the Trust, a security interest in and to, and a lien upon and
right of set-off against, all of Pledgor's right, title and interest in and to
(i) the Pledged Items described in paragraphs (b), (c) and (d); (ii) all
additions to and substitutions for such Pledged Items; (iii) (subject to the
remittance of certain payments upon satisfaction of the conditions specified in
Section 7(a) hereof) all income, proceeds and collections received or to be
received, or derived or to be derived, now or any time hereafter from or in
connection with the Pledged Items (whether such proceeds arise before or after
the commencement of any proceeding under any applicable bankruptcy, insolvency
or other similar law, by or against the Pledgor with respect to the Pledgor);
and (iv) all powers and rights now owned or hereafter acquired under or with
respect to the Pledged Items (such Pledged Items, additions, substitutions,
income, proceeds, collections, powers and rights being herein collectively
called the "Collateral"). The Collateral Agent shall have all of the rights,
----------
remedies and recourses with respect to the Collateral afforded a secured party
by the New York Uniform Commercial Code, in addition to, and not in limitation
of, the other rights, remedies and recourses afforded to the Collateral Agent by
this Agreement.
(b) Firm Payment Date. At the Firm Payment Date, the Pledgor shall
-----------------
deliver to the Collateral Agent in pledge hereunder one or more certificates in
registered form
<PAGE>
representing in the aggregate [ ] shares of the Common Stock,
indorsed in blank or in the name of the Collateral Agent for the benefit of the
Trust (together with all signature guarantees and any other documents necessary
to permit the Collateral Agent to effect the re-registration of such Common
Stock without further action by the Pledgor) or, if such Common Stock is not
issuable in certificated form but is held in book entry form by The Depository
Trust Company, the Pledgor shall transfer such number of shares of Common Stock
to an account of the Collateral Agent or to an account (other than an account of
the Pledgor) designated by the Collateral Agent with The Depository Trust
Company.
(c) Option Closing Date. Effective upon and subject to the receipt by
-------------------
the Pledgor of the Additional Purchase Price, at the Option Closing Date, the
Pledgor shall deliver to the Collateral Agent in pledge hereunder one or more
certificates in registered form representing in the aggregate a number of shares
of Common Stock equal to the Additional Share Base Amount, indorsed in blank or
in the name of the Collateral Agent for the benefit of the Trust (together with
all signature guarantees and any other documents necessary to permit the
Collateral Agent to effect the re-registration of such Common Stock without
further action by the Pledgor) or, if such Common Stock is not issuable in
certificated form but is held in book entry form by The Depository Trust
Company, the Pledgor shall transfer such number of shares of Common Stock to an
account of the Collateral Agent or to an account (other than an account of the
Pledgor) designated by the Collateral Agent with The Depository Trust Company.
(d) Extension of Exchange Date. Prior to, or simultaneously with
--------------------------
Pledgor's election to extend the Exchange Date pursuant to Section 1.3(f) of the
Purchase Agreement Additional Government Securities meeting the requirements of
Section 1.3(f) of the Purchase Agreement.
(e) Reregistration. Immediately following the Firm Payment Date and
--------------
any Option Closing Date, the Collateral Agent shall cause all certificates for
Common Stock delivered pursuant to Section 1(b) or 1(c) above to be re-
registered on the books of the transfer agent for the Common Stock into the name
of the Collateral Agent or its nominee, and shall thereafter maintain them in
such form until the termination of this Agreement; provided, however, that at
-------- -------
any time following the Firm Payment Date and any Option Closing Date, the
Collateral Agent may cause any such certificates for the Common Stock to be
deposited with The Depository Trust Company and thereafter hold such
certificates in book entry form in an account (other than an account of the
Pledgor) designated by the Collateral Agent.
2. Definitions.
-----------
Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to them in the Purchase Agreement. Capitalized terms used
herein shall have the meanings as follows:
"Authorized Representative" of the Pledgor means any trustee, officer
-------------------------
or other representative as to whom Pledgor shall have delivered notice to the
Collateral Agent that such trustee or other representative is authorized to act
hereunder on behalf of Pledgor.
2
<PAGE>
"Business Day" means any day except a Saturday, Sunday or other day on
------------
which banking institutions in New York City are authorized or obligated by law
or regulation to close or a day on which the New York Stock Exchange, Inc. is
closed.
"Cash Delivery Obligations" means, at any time (A) if no Adjustment
-------------------------
Event shall have occurred prior to such time, zero, and (B) from and after any
Adjustment Event, the product of: (i) the Firm Share Base Amount plus the
Additional Share Base Amount (if any) and (ii) the Transaction Value of any
property other than Reported Securities received by the Pledgor in such
Adjustment Event, multiplied successively by each number by which the Exchange
Rate shall have been multiplied on or prior to the Adjustment Event pursuant to
the adjustments provided for under Section 6.1 of the Purchase Agreement.
"Collateral" has the meaning specified in Section 1(a).
----------
"Collateral Agent" means the financial institution identified as such
----------------
in the preliminary paragraph hereof, or any successor appointed in accordance
with Section 9.
"Collateral Agreement" means this Collateral Agreement and any
--------------------
exhibits hereto.
"Collateral Event of Default" has the meaning specified in Section
---------------------------
6(e).
"Collateral Requirement" means, as of any date and with respect to:
----------------------
(i) any Common Stock, 100%; (ii) any Reported Securities, 100%; (iii) any U.S.
Government Securities pledged in respect of Cash Delivery Obligations, 105%; and
(iv) any other U.S. Government Securities, 150%, provided that upon and after
any failure to cure an Insufficiency Determination by 4:00 p.m. New York City
time on the Business Day following telephonic notice of such Insufficiency
Determination as described in Section 6(e), which insufficiency shall be
continuing on such Business Day, the Collateral Requirement relating to any U.S.
Government Securities (other than (i) Additional Government Securities and (ii)
U.S. Government Securities pledged in respect of Cash Delivery Obligations)
shall be 200%. The portion of any pledged U.S. Government Securities that shall
be deemed at any time to be in respect of Cash Delivery Obligations shall be as
provided in Section 6(e).
"Delivery Date" has the meaning specified in Section 8(a).
-------------
"Eligible Collateral" means (i) Common Stock, (ii) U.S. Government
-------------------
Securities, (iii) from and after Pledgor's election to extend the Exchange Date
pursuant to Section 1.3(f) of the Purchase Agreement, Additional Government
Securities, and (iv) from and after any Adjustment Event, Reported Securities,
provided, in each case, that (A) the Pledgor has good and marketable title
thereto, free of all Liens (other than the Liens created by this Collateral
Agreement) and Transfer Restrictions and (B) the Collateral Agent has a valid,
first priority perfected security interest therein and first lien thereon, and
provided further that to the extent the number of shares of Common Stock or
Reported Securities pledged hereunder exceeds at any time the Maximum
Deliverable Number thereof, such excess shares shall not be Eligible Collateral.
"Event of Default" means the occurrence of: (i) an event described in
----------------
clause (a) or (b) of Article VII of the Purchase Agreement, (ii) a Collateral
Event of Default, (iii) a failure by
3
<PAGE>
Pledgor to have caused the Collateral to meet the requirements described in
Section 5(d), (iv) if an Adjustment Event shall have occurred prior to the
Exchange Date, failure by Pledgor to cause to be delivered to Purchaser on the
Exchange Date the consideration then required to be delivered pursuant to
Section 6.2 of the Purchase Agreement or (v) if Pledgor shall have exercised its
Cash Delivery Option, a failure by the Pledgor to deliver cash on the Exchange
Date in the amount required under Section 1.3(d) of the Purchase Agreement.
"Ineligible Collateral" means Collateral that does not constitute
---------------------
"Eligible Collateral".
"Insufficiency Determination" has the meaning specified in Section
---------------------------
6(e).
"Lien" means any lien, mortgage, security interest, pledge, charge or
----
encumbrance of any kind.
"Market Value" means, as of any date: (a) with respect to any Common
------------
Stock (except as otherwise provided in Section 6(e)(2)), the Closing Price on
such date; (b) with respect to any U.S. Government Security, the product of
(x)(i) the average unit bid price for such security on the Trading Day prior to
such date as published in the New York edition of The Wall Street Journal or The
New York Times or, if not so published, (ii) the lower bid price quoted (which
quotation shall be evidenced in writing) on such date (or if such date is not a
Trading Date, on the preceding Trading Date) by either of two nationally
recognized dealers making a market in such security which are members of the
National Association of Securities Dealers, Inc. and (y) the number of such
units comprised in the outstanding principal amount of such U.S. Government
Security; and (c) with respect to any unit of Reported Securities, the Closing
Price thereof on such date; provided that the "Market Value" of any Ineligible
Collateral shall be zero.
"Maximum Deliverable Number" means, on any date, with respect to the
--------------------------
Common Stock, the product of the Firm Share Base Amount plus the Additional
Share Base Amount (if any), multiplied successively by each number by which the
Exchange Rate shall have been multiplied on or prior to such date pursuant to
the adjustments provided for under Section 6.1 of the Purchase Agreement. The
Maximum Deliverable Number of Reported Securities means, on any date, the
product of (i) the Firm Share Base Amount plus the Additional Share Base Amount
(if any) and (ii) the number of Reported Securities received by the Pledgor in
the Adjustment Event for each share of Common Stock, multiplied successively by
each number by which the Exchange Rate shall have been multiplied on or prior to
such date and after the date of such Adjustment Event pursuant to the
adjustments provided for under Article VI of the Purchase Agreement.
"Person" means an individual, a corporation, a partnership, an
------
association, a limited liability company, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Pledge Value" means, as of any date and with respect to any
------------
particular type of Collateral, an amount equal to the aggregate Market Value of
such Collateral divided by the Collateral Requirement for such Collateral.
4
<PAGE>
"Pledge Value Requirement" means, as of any date, (a) the aggregate
------------------------
Market Value on such date of the Maximum Deliverable Number of shares of Common
Stock or, from and after an Adjustment Event, Reported Securities, on such date
plus (b) from and after an Adjustment Event, the Cash Delivery Obligations plus
(c) from and after the Pledgor's extension of the Exchange Date pursuant to
Section 1.3(f) of the Purchase Agreement, the Additional Government Securities.
"Pledged Items" means, as of any date, any and all securities and
-------------
instruments delivered by the Pledgor to be held by the Collateral Agent under
this Collateral Agreement as Collateral, whether Eligible Collateral or
Ineligible Collateral.
"Prior Collateral" has the meaning specified in Section 6(b)(1).
----------------
"Responsible Officer" means, when used with respect to the Collateral
-------------------
Agent, any vice president, assistant vice president, assistant treasurer or
assistant secretary located in the division or department of the Collateral
Agent responsible for performing the obligations of the Collateral Agent under
this Collateral Agreement, or in any other division or department of the
Collateral Agent performing operations substantially equivalent to those
performed by such division or department pursuant hereto, or any other officer
of the Collateral Agent or any successor Collateral Agent customarily performing
functions similar to those performed by any of the aforesaid officers, and also
means, with respect to any matter relating to this Collateral Agreement or the
Collateral, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Transfer Restriction" means, with respect to any item of Collateral,
--------------------
any condition to or restriction on the ability of the holder thereof to sell,
assign or otherwise transfer such item of Collateral or to enforce the
provisions thereof or of any document related thereto whether set forth in such
item of Collateral itself or in any document related thereto, including, without
limitation, (i) any requirement that any sale, assignment or other transfer or
enforcement of such item of Collateral be consented to or approved by any
Person, including, without limitation, the issuer thereof or any other obligor
thereon, (ii) any limitations on the type or status, financial or otherwise, of
any purchaser, pledgee, assignee or transferee of such item of Collateral, (iii)
any requirement of the delivery of any certificate, consent, agreement, opinion
of counsel, notice or any other document of any Person to the issuer of, any
other obligor on or any registrar or transfer agent for, such item of
Collateral, prior to the sale, pledge, assignment or other transfer or
enforcement of such item of Collateral and (iv) any registration or
qualification requirement for such item of Collateral pursuant to any federal or
state securities law; provided that the required delivery of any assignment from
the seller, pledgor, assignor or transferor of such item of Collateral, together
with any evidence of the corporate or other authority of such Person, shall not
constitute a "Transfer Restriction."
"Trustee" or "Trustees" means any trustee or trustees of the Trust
------- --------
identified on the signature pages hereto, or any successor as such trustee or
trustees.
"UCC" means the Uniform Commercial Code as in effect in the State of
---
New York.
5
<PAGE>
"U.S. Government Securities" means direct obligations of the United
--------------------------
States of America that mature on a date that is one year or less from the date
such obligations are pledged hereunder, but in any event prior to the Exchange
Date.
3. Representations and Warranties of the Pledgor.
---------------------------------------------
The Pledgor hereby represents and warrants to the Collateral Agent and
the Trust that:
(a) Power. The Pledgor has full power and authority to execute
-----
and deliver this Collateral Agreement and to perform and observe the
provisions hereof;
(b) Non-Contravention. The execution, delivery and performance by
-----------------
the Pledgor of this Collateral Agreement do not and will not violate,
contravene or constitute a default under any provision of applicable law or
regulation or of any material agreement, judgment, injunction, order,
decree or other instrument binding upon the Pledgor. The Pledgor is not in
default under any agreement by which the Collateral may be bound and no
litigation, arbitration or administrative proceedings are current or
pending, which default, litigation, arbitration or administrative
proceedings are material to the Collateral in the context of this
Collateral Agreement.
(c) Binding Effect. This Collateral Agreement constitutes a
--------------
valid and binding agreement of the Pledgor enforceable against the Pledgor
in accordance with its terms.
(d) Solvency. The Pledgor is presently solvent and able to pay,
--------
and paying its debts as they become due, and anticipates that it will
continue to be able to pay its debts as they become due for the foreseeable
future.
(e) No Transfer Restrictions. Except for any legend with respect
------------------------
to restrictions pursuant to applicable federal and state securities laws on
transfer of the Common Stock pledged by the Pledgor hereunder which appears
on the [face] [back] of the certificates representing such Common Stock
(and which (i) will not be applicable to the delivery of any such Common
Stock to the Trust pursuant to the Purchase Agreement and this Agreement or
to the delivery of any such Common Stock by the Trust to the holders of
DECS pursuant to the DECS and (ii) will be removed at the request of the
Collateral Agent to the transfer agent for the Common Stock prior to any
such delivery to the holders of DECS) no Transfer Restrictions exist with
respect to or otherwise apply to the assignment of, or transfer by the
Pledgor of possession of, any items of Collateral to the Collateral Agent
hereunder, or the subsequent sale or transfer of such items of Collateral
by the Collateral Agent pursuant to the terms hereof.
(f) Title to Collateral; Perfected Security Interest. The
------------------------------------------------
Pledgor has good and marketable title to the Pledged Items, free of all
Liens (other than the Lien created by this Collateral Agreement) and
Transfer Restrictions (except for any legend as provided in Section 3(e)
hereof). Upon delivery of the Pledged Items described in paragraphs (b)
and (c) of Section 1 to the Collateral Agent hereunder, the Collateral
Agent will obtain a valid, first priority perfected security interest in,
and a first lien upon,
6
<PAGE>
such Pledged Items subject to no other Lien. None of the Collateral is or
shall be pledged by the Pledgor as collateral for any other purpose.
(g) Control of Seller. [ ] is solely
-----------------
controlled by [ ] as the sole trustee of the trust.
(h) Interest in Seller. [ ] owns 100% of
------------------
the beneficial interest in [ ].
4. Representations and Warranties of the Collateral Agent.
------------------------------------------------------
The Collateral Agent represents and warrants to the Pledgor and the
Trust that:
(a) Corporate Existence and Power. The Collateral Agent is a
-----------------------------
banking corporation, duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, and has
all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to enter into, and perform
its obligations under, this Collateral Agreement.
(b) Authorization and Non-Contravention. The execution, delivery
-----------------------------------
and performance by the Collateral Agent of this Collateral Agreement have
been duly authorized by all necessary corporate action on the part of the
Collateral Agent (no action by the shareholders of the Collateral Agent
being required) and do not and will not violate, contravene or constitute a
default under any provision of applicable law or regulation or of the
charter or by-laws of the Collateral Agent or of any material agreement,
judgment, injunction, order, decree or other instrument binding upon the
Collateral Agent.
(c) Binding Effect. This Collateral Agreement constitutes a
--------------
valid and binding agreement of the Collateral Agent enforceable against the
Collateral Agent in accordance with its terms.
5. Certain Covenants of the Pledgor.
--------------------------------
The Pledgor agrees that, so long as any of its obligations under the
Purchase Agreement remain outstanding:
(a) Title to Collateral. The Pledgor shall at all times
-------------------
hereafter have good and marketable title to the Collateral pledged
hereunder, free of all Liens (other than the Liens created by this
Collateral Agreement) and Transfer Restrictions (except for any legend as
provided in Section 3(e) hereof), and, subject to the terms of this
Collateral Agreement, will at all times hereafter have good, right and
lawful authority to assign, transfer and pledge such Collateral and all
such additions thereto and substitutions therefor under this Collateral
Agreement.
(b) Pledge Value Requirement. The Pledgor shall cause the
------------------------
aggregate Pledge Value of the Collateral to be equal to or greater than the
Pledge Value
7
<PAGE>
Requirement at all times, and shall pledge additional Collateral in the
manner described in Section 6(d) as necessary to cause such requirement to
be met.
(c) Pledge upon Adjustment Event. Upon the occurrence of an
----------------------------
Adjustment Event, the Pledgor shall immediately cause to be delivered to
the Collateral Agent, in the manner provided in Section 6(d): (i) U.S.
Government Securities having an aggregate Market Value at least equal to
105% of the Cash Delivery Obligations, if any; and (ii) Reported Securities
in an amount at least equal to the Maximum Deliverable Number thereof (if
any), or, at Pledgor's election, U.S. Government Securities having an
aggregate Market Value at least equal to 150% of such Maximum Deliverable
Number of Reported Securities; in each case to be held as [substitute or]
additional Collateral hereunder.
(d) Composition of Pledged Items. [Notwithstanding the Pledgor's
----------------------------
right to substitute Collateral pursuant to Section 6(b),] the Pledgor shall
cause the Collateral to include, on the Exchange Date, unless Pledgor shall
have exercised its Cash Delivery Option, a number of shares of Common Stock
(and/or, if an Adjustment Event shall have occurred, Reported Securities)
at least equal to the number of shares of Common Stock (and/or, if an
Adjustment Event shall have occurred, Reported Securities) required to be
delivered under the Purchase Agreement on the Exchange Date. If the
Pledgor exercises its Cash Delivery Option, then the Pledgor shall cause
the Collateral for the Cash Delivery Obligations to consist entirely of
U.S. Government Securities or cash at all times from and after the date 25
Business Days prior to the Exchange Date, and, if the Pledgor shall have
extended the Exchange Date pursuant to Section 1.3(f) of the Purchase
Agreement, the Pledgor shall cause Collateral for Pledgor's obligations in
connection with Pledgor's extension of the Exchange Date to consist
entirely of Additional Government Securities or cash.
(e) Further Assurances. The Pledgor shall, at its expense and in
------------------
such manner and form as the Trust or the Collateral Agent may require,
give, execute, deliver, file and record any financing statement, notice,
instrument, document, agreement or other papers that may be necessary or
desirable in order to create, preserve, perfect, substantiate or validate
any security interest granted pursuant hereto or to enable the Collateral
Agent to exercise and enforce its rights and the rights of the Trust
hereunder with respect to such security interest. To the extent permitted
by applicable law, the Pledgor hereby authorizes the Collateral Agent to
execute and file, in the name of the Pledgor or otherwise, Uniform
Commercial Code financing or continuation statements (which may be carbon,
photographic, photostatic or other reproductions of this Agreement or of a
financing statement relating to this Agreement) which the Collateral Agent
in its sole discretion may deem necessary or appropriate to further
perfect, or maintain the perfection of the security interests granted
hereby.
[(f) Control of [ ] GRAT. [
------------------------------------
] GRAT shall be controlled by [ ] and [
] shall be the sole trustee of such trust so long as [s]he shall have legal
capacity so to act.]
8
<PAGE>
(g) The Pledgor shall not consolidate with or merge with or into,
or transfer all or substantially of its assets to, any other Person unless:
(i) either (x) the Pledgor shall be the resulting or surviving
entity or (y) such other Person is an entity organized and existing
under the laws of the United States, a State thereof or the District
of Columbia, such other Person expressly assumes by supplemental
agreement executed and delivered to the Trust, in form satisfactory to
counsel to the Trust, all the obligations of the Pledgor under the
Underwriting Agreement, Collateral Agreement, the Reimbursement
Agreement, and this Agreement (in which case all such obligations of
the Pledgor shall terminate); and
(ii) the Pledgor shall deliver to the Trust prior to the proposed
transaction an Officer's Certificate and an Opinion of Counsel, each
of which shall state that such consolidation, merger or transfer and
such supplemental agreement comply with this Section [5(g)] and that
all conditions precedent herein provided for relating to such
transaction have been complied with.
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Pledgor in accordance with this
Section [5(g)], the successor entity formed by such consolidation or into
which the Pledgor is merged or to which such transfer is made shall succeed
to, and be substituted for, and may exercise every right and power of the
Pledgor under this Agreement with the same effect as if such successor
entity had been named as the Pledgor herein, and the predecessor entity,
shall be relieved of any further obligation under this Agreement.
6. Administration of the Collateral and Valuation of the Securities.
----------------------------------------------------------------
(a) Valuation of Collateral. The Collateral Agent shall determine on
-----------------------
each Business Day whether the Pledge Value is at least equal to the Pledge Value
Requirement and whether an Insufficiency Determination or Collateral Event of
Default shall have occurred and, from and after any substitution of U.S.
Government Securities for pledged Common Stock or Reported Securities pursuant
to paragraph (b) of this Section 6, shall determine the Pledge Value on each
Business Day and shall provide written notice of the Pledge Value to the
Pledgor.
[(b) Substitution of Collateral. The Pledgor may substitute
--------------------------
Collateral in accordance with the following provisions:
(1) Unless an Event of Default or a failure by the Pledgor to
meet any of its obligations under Section 5(b) or (c) hereof has occurred
and is continuing, the Pledgor shall have the right at any time and from
time to time to deposit Eligible Collateral with the Collateral Agent in
substitution for Pledged Items previously deposited hereunder ("Prior
-----
Collateral") and to obtain the release from the Lien hereof of such Prior
----------
Collateral.
(2) If the Pledgor wishes to deposit Eligible Collateral with the
Collateral Agent in substitution for Prior Collateral, the Pledgor shall
(i) give written notice to the Collateral Agent identifying the Prior
Collateral to be released from the Lien
9
<PAGE>
hereof, (ii) deliver to the Collateral Agent concurrently with such
Eligible Collateral a certificate of the Pledgor substantially in the form
of Exhibit A hereto and dated the date of such delivery, (A) identifying
the items of Eligible Collateral being substituted for the Prior Collateral
and the Prior Collateral that is to be transferred to the Pledgor and (B)
certifying that the representations and warranties contained in such
Exhibit A hereto are true and correct on and as of the date thereof and
(iii) deliver to the Collateral Agent concurrently with such Eligible
Collateral an opinion (dated the date of such delivery) of counsel,
substantially similar to those delivered by Kirkpatrick & Lockhart at the
Firm Purchase Date with respect to similar matters, addressed to the
Collateral Agent confirming the representations contained in the second
sentence of paragraph 3(b) of Exhibit A hereto. The Pledgor hereby
covenants and agrees to take all actions required under Section 6(d) and
any other actions necessary to create for the benefit of the Collateral
Agent a valid, first priority perfected security interest in, and a first
lien upon, such Eligible Collateral deposited with the Collateral Agent in
substitution for Prior Collateral.
(3) No such substitution shall be made unless and until the
Collateral Agent shall have determined that the aggregate Pledge Value of
all of the Collateral at the time of such proposed substitution, after
giving effect to the proposed substitution, shall at least equal the Pledge
Value Requirement.]
(c) Additional Collateral. The Pledgor may pledge additional
---------------------
Collateral (excluding Additional Government Securities) hereunder at any time
and may pledge Additional Government Securities hereunder at any time prior to
or simultaneously with Pledgor's election to extend the Exchange Date pursuant
to Section 1.3(f) of the Purchase Agreement. Concurrently with the delivery of
any additional Eligible Collateral, the Pledgor shall deliver (i) in the case of
Eligible Collateral consisting of Additional Government Securities, a
certificate of the Pledgor substantially in the form of Exhibit B hereto, or in
the case of all other Eligible Collateral, a certificate of the Pledgor
substantially in the form of Exhibit C hereto and dated the date of such
delivery, in each case (A) identifying the additional items of Eligible
Collateral being pledged and (B) certifying that with respect to such items of
additional Eligible Collateral the representations and warranties contained in
such Exhibit B or Exhibit C, as the case may be, hereto are true and correct on
and as of the date thereof and (ii) an opinion, dated the date of such delivery,
of counsel addressed to the Collateral Agent, substantially similar to those
delivered by Kirkpatrick & Lockhart at the Firm Purchase Date with respect to
similar matters, confirming the representations contained in the second sentence
of paragraph 2(b) of Exhibit B or Exhibit C, as the case may be, hereto. The
Pledgor hereby covenants and agrees to take all actions required under Section
6(d) and any other actions necessary to create for the benefit of the Collateral
Agent a valid, first priority perfected security interest in, and a first lien
upon, such additional Eligible Collateral.
(d) Delivery of Collateral. The Pledgor shall deliver all Collateral
----------------------
to the Collateral Agent in accordance with the following provisions:
(1) Pledged Common Stock. In the case of Collateral consisting
--------------------
of Common Stock, by delivery of certificates evidencing such Common Stock,
indorsed in blank (together with all signature guarantees and any other
documents necessary to
10
<PAGE>
permit the Collateral Agent to effect the re-registration thereof without
further action by the Pledgor) or registered in the name of the Collateral
Agent or its nominee or, if such Common Stock is not issuable in
certificated form but is held in book entry form by The Depository Trust
Company, by transfer to an account of the Collateral Agent or to an account
(other than an account of the Pledgor) designated by the Collateral Agent
with The Depository Trust Company;
(2) Pledged Government Securities. In the case of Collateral
-----------------------------
consisting of U.S. Government Securities or Additional Government
Securities, by transfer thereof through the Book Entry System of the
Federal Reserve System to the account of the Collateral Agent or to an
account (other than an account of the Pledgor) designated by the Collateral
Agent; and
(3) Pledged Reported Securities. In the case of Collateral
---------------------------
consisting of Reported Securities, by delivery of certificates evidencing
such Reported Securities, indorsed in blank (together with all signature
guarantees and any other documents necessary to permit the Collateral Agent
to effect the re-registration thereof without further action by the
Pledgor) or registered in the name of the Collateral Agent or its nominee
or, if such Reported Securities are not issuable in certificated form but
are held in book entry form by The Depository Trust Company, by transfer to
an account of the Collateral Agent or to an account (other than an account
of the Pledgor) designated by the Collateral Agent with The Depository
Trust Company. Each such delivery of Reported Securities shall be
accompanied by an opinion of counsel, substantially similar to those
delivered by Kirkpatrick & Lockhart at the Firm Purchase Date with respect
to similar matters, satisfactory to the Collateral Agent that the
Collateral Agent has obtained a valid, first priority perfected security
interest in, and a first lien upon, such Reported Securities.
Upon delivery of any Pledged Item under this Collateral Agreement, the
Collateral Agent shall examine such Pledged Item and any opinions and
certificates delivered pursuant to Sections 6(b), 6(c), 6(d)(3) or otherwise
pursuant to the terms hereof in connection therewith to determine that they
comply as to form with the requirements for Eligible Collateral. Immediately
following the delivery to the Collateral Agent of any Collateral in the form of
certificates indorsed in blank, the Collateral Agent shall cause all such
certificates to be re-registered on the books of the applicable transfer agent
into the name of the Collateral Agent or its nominee, and shall thereafter
maintain all such Collateral in such form until the termination of this
Agreement; provided, however, that at any time following such delivery to the
-----------------
Collateral Agent, the Collateral Agent may cause any such certificates to be
deposited with The Depository Trust Company and thereafter hold such
certificates in book entry form in an account (other than an account of Pledgor)
designated by the Collateral Agent. The Pledgor hereby designates the
Collateral Agent as the person in whose name any Collateral held in book entry
form in the Federal Reserve System shall be registered.
(e) Insufficiency Determination.
---------------------------
(1) If on any Business Day the Collateral Agent determines that
the aggregate Pledge Value of the Collateral is less than the Pledge Value
Requirement (any
11
<PAGE>
such determination, an "Insufficiency Determination"), the Collateral Agent
---------------------------
shall, by telephone call to an Authorized Representative of the Pledgor
followed by a written confirmation of such call, promptly notify the
Pledgor of such determination and of the amount of the insufficiency.
(2) If, by 4:00 p.m., New York City time on the Business Day
following the day on which telephonic notice shall have been given pursuant
to the preceding paragraph (e)(1), the Pledgor shall have failed to
deliver, in the manner set forth in paragraphs (c) and (d) of this Section
6, sufficient additional Eligible Collateral so that, after giving effect
to such delivery (and taking into account that Common Stock and Reported
Securities in excess of the Maximum Deliverable Number thereof shall not
constitute Eligible Collateral), the aggregate Pledge Value of the
Collateral, as of such Business Day, is at least equal to the Pledge Value
Requirement, then (x) the Collateral Requirement with respect to any U.S.
Government Securities pledged hereunder (other than in respect of Cash
Delivery Obligations) shall be increased from 150% to 200%, and (y) unless
a Collateral Event of Default shall have occurred and be continuing, the
Collateral Agent shall:
(i) commence sales, in the manner described in paragraph (3)
below, of such portion of the Collateral consisting of U.S. Government
Securities as may be required to be sold in order to generate proceeds
sufficient to purchase Common Stock and/or, after an Adjustment Event,
Reported Securities, as described in the following clause (ii); and
(ii) commence purchases, in the manner described in
paragraph (3) below, of Common Stock and/or, after an Adjustment
Event, Reported Securities, in an amount sufficient to cause the
aggregate Pledge Value of the Collateral to be at least equal to the
Pledge Value Requirement.
Notwithstanding the foregoing, the Collateral Agent shall
discontinue sales and purchases pursuant to the preceding clauses (i) and
(ii), respectively, if at any time a Collateral Event of Default shall have
occurred and be continuing. The Collateral Agent shall determine the
Market Value and the Pledge Value of the Collateral after each purchase of
Common Stock or Reported Securities pursuant to the preceding clause (ii)
in order to determine whether the Pledge Value Requirement is met and
whether a Collateral Event of Default has occurred. Solely for purposes
of such calculation, the Market Value of the Common Stock or Reported
Securities shall be: (A) the most recent sales price as reported in the
composite transactions for the principal securities exchange on which the
Common Stock or Reported Securities, as the case may be, are then listed
or, if such securities are not so listed, the last quoted ask price for
such securities in the over-the-counter market as reported by The NASDAQ
National Market or, if not so reported, by the National Quotation Bureau or
a similar organization; or (B) if higher, in the case of Common Stock, the
most recent available Closing Price.
A "Collateral Event of Default" shall mean, at any time, the
---------------------------
occurrence of any of the following: (A) failure of the aggregate Market
Value of the Collateral to equal or exceed the Pledge Value Requirement;
(B) failure of the Market Value of any U.S.
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<PAGE>
Government Securities pledged at such time (not including any (i)
Additional Government Securities or (ii) U.S. Government Securities pledged
in respect of Cash Delivery Obligations at such time) to have an aggregate
Market Value of at least 105% of the Market Value of a number of shares of
Common Stock (or, from and after any Adjustment Event, Reported Securities)
equal to (x) the Maximum Deliverable Number thereof minus (y) the number
thereof pledged as Collateral hereunder at such time; or (C) from and after
any Adjustment Event, failure of the U.S. Government Securities pledged in
respect of Cash Delivery Obligations to have an aggregate Market Value at
least equal to 105% of the Cash Delivery Obligations at such time, if, in
the case of a failure described in this clause (C), such failure shall
continue to be in effect at 4:00 p.m., New York City time, on the Business
Day following the day on which telephonic notice in respect thereof shall
have been given pursuant to paragraph (e)(1) above. For purposes of this
Agreement, the portion of any pledged U.S. Government Securities that shall
be deemed to be in respect of Cash Delivery Obligations at any time shall
be a portion having a Market Value equal to 105% of the Cash Delivery
Obligations at such time (or, if less, the aggregate Market Value of all
U.S. Government Securities pledged at such time).
(3) Collateral sold and Common Stock or shares of Reported
Securities purchased by the Collateral Agent pursuant to the preceding
paragraphs (e)(2)(i) and (ii) may be sold and purchased on any securities
exchange or in any over-the-counter market or in any private purchase
transaction, and at such price or prices, in each case as the Collateral
Agent may deem satisfactory. The Pledgor covenants and agrees that it will
execute and deliver such documents and take such other action as the
Collateral Agent deems necessary or advisable in order that any such sales
and purchases may be made in compliance with law.
(f) Release of Excess Collateral. If on any Business Day the
----------------------------
Collateral Agent determines that the aggregate Pledge Value of the Pledgor's
Eligible Collateral exceeds the Pledge Value Requirement and no Event of Default
or failure by the Pledgor to meet any of its obligations under Sections 5 or 6
hereof has occurred and is continuing, the Pledgor may obtain the release from
the Lien hereof of any Collateral having an aggregate Pledge Value on such
Business Day less than or equal to such excess, upon delivery to the Collateral
Agent of a written notice from an Authorized Representative of the Pledgor
indicating the items of Collateral to be released. Such Collateral shall be
released only after the Collateral Agent shall have determined that the
aggregate Pledge Value of all of the Collateral remaining after such release as
determined on such Business Day is at least equal to the Pledge Value
Requirement.
(g) Delivery of Purchase Agreement Consideration. On the Exchange
--------------------------------------------
Date, unless Pledgor shall have exercised its Cash Delivery Option, the
Collateral Agent shall deliver to the Trust Common Stock (or, if an Adjustment
Event shall have occurred, Reported Securities) then held by it hereunder
representing the number of shares of Common Stock (or, if an Adjustment Event
shall have occurred, Reported Securities) then required to be delivered under
the Purchase Agreement. Upon such delivery, the Trust shall hold such Common
Stock or Reported Securities, as the case may be, absolutely and free from any
claim or right whatsoever.
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<PAGE>
(h) Investment of Cash Collateral. The Collateral Agent shall invest
-----------------------------
any cash received by it pursuant to Section 6.2 of the Purchase Agreement in
direct obligations of the United States of America maturing on or before the
Exchange Date.
7. Income and Voting Rights on Collateral.
--------------------------------------
(a) Unless an Event of Default or failure by the Pledgor to meet any
of Pledgor's obligations under Section 5(b) or (c) hereof has occurred and is
continuing, the Pledgor shall be entitled to receive for Pledgor's own account
all dividends, interest and, if any, principal and premium relating to all of
the Collateral, unless the payment thereof to the Pledgor would reduce the
aggregate Pledge Value of the Collateral below the Pledge Value Requirement.
The Collateral Agent agrees to remit to the Pledgor on the Business Day received
or the first Business Day thereafter all such payments received by it. If an
Event of Default or failure by the Pledgor to meet any of its obligations under
Section 5(b) or (c) hereof has occurred and is continuing, all such payments
made or accrued after and during the continuance of such Event of Default or
failure shall be retained by the Collateral Agent, and any such payments which
are received by the Pledgor shall be received in trust for the benefit of the
Trust, shall be segregated from other funds of the Pledgor and shall forthwith
be paid over to the Collateral Agent. Any such payments so retained by, or paid
over to, the Collateral Agent shall be held by the Collateral Agent as
Collateral hereunder. If any such Event of Default or failure is no longer
continuing, then the Collateral Agent shall remit any such payments that are so
retained by, or paid to it, on the first Business Day after the Collateral Agent
shall have received notice from the Trust that such Event of Default or failure
is no longer continuing, unless the payment thereof to the Pledgor would reduce
the aggregate Pledge Value of the Collateral below the Pledge Value Requirement.
(b) Unless an Event of Default has occurred and is continuing, the
Pledgor shall have the right, from time to time, to vote and to give consents,
ratifications and waivers with respect to the Collateral, and the Collateral
Agent shall promptly deliver to the Pledgor such proxies, powers of attorney,
consents, ratifications and waivers in respect of any of the Collateral which is
registered in the name of the Collateral Agent or its nominee and shall further
deliver such documents and instruments as shall be specified in a written
request by the Pledgor.
If an Event of Default shall have occurred and be continuing, the
Collateral Agent shall have the right to the extent permitted by law, and the
Pledgor shall take all such action as may be necessary or appropriate to give
effect to such right, to vote and to give consents, ratifications and waivers,
and take any other action with respect to any or all of the Collateral with the
same force and effect as if the Collateral Agent were the absolute and sole
owner thereof.
8. Remedies upon Events of Default.
-------------------------------
(a) If any Event of Default shall have occurred and be continuing, the
Collateral Agent may exercise on behalf of the Trust all the rights of a secured
party under the UCC (whether or not in effect in the jurisdiction where such
rights are exercised) and, in addition, without being required to give any
notice, except as herein provided or as may be required by mandatory provisions
of law, shall: (i) deliver all Collateral consisting of Common
14
<PAGE>
Stock or Reported Securities (but not, in either case, in excess of the number
of shares thereof deliverable under the Purchase Agreement at such time) to the
Trust on the date of the notice delivered to the Collateral Agent pursuant to
the last paragraph of Article VII of the Purchase Agreement relating to such
Event of Default (or, in the case of an Event of Default described in clause
(iii), (iv) or (v) of the definition thereof in this Agreement, on the Exchange
Date) (in either case, the "Delivery Date"), whereupon the Trust shall hold such
-------------
Common Stock or Reported Securities absolutely free from any claim or right of
whatsoever kind, including any equity or right of redemption of the Pledgor
which may be waived, and the Pledgor, to the extent permitted by law, hereby
specifically waives all rights of redemption, stay or appraisal which Pledgor
has or may have under any law now existing or hereafter adopted; and (ii) if
such delivery shall be insufficient to satisfy in full all of the obligations of
Pledgor under the Purchase Agreement, sell all of the remaining Collateral, or
such lesser portion thereof as may be necessary to generate proceeds sufficient
to satisfy in full all of the obligations of Pledgor under the Purchase
Agreement, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery, and at such
price or prices as the Collateral Agent may deem satisfactory. The Pledgor
covenants and agrees to execute and deliver such documents and take such other
action as the Collateral Agent deems necessary or advisable in order that any
such sale may be made in compliance with law. Upon any such sale the Collateral
Agent shall have the right to deliver, assign and transfer to the purchaser
thereof the Collateral so sold. Each purchaser at any such sale shall hold the
Collateral so sold absolutely and free from any claim or right of whatsoever
kind, including any equity or right of redemption of the Pledgor which may be
waived, and the Pledgor, to the extent permitted by law, hereby specifically
waives all rights of redemption, stay or appraisal which Pledgor has or may have
under any law now existing or hereafter adopted. The notice (if any) of such
sale required by Article 9 of the UCC shall (1) in case of a public sale, state
the time and place fixed for such sale, (2) in case of sale at a broker's board
or on a securities exchange, state the board or exchange at which such sale is
to be made and the day on which the Collateral, or the portion thereof so being
sold, will first be offered for sale at such board or exchange, and (3) in the
case of a private sale, state the day after which such sale may be consummated.
Any such public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Collateral Agent may fix in
the notice of such sale. At any such sale the Collateral may be sold in one lot
as an entirety or in separate parcels, as the Collateral Agent may determine.
The Collateral Agent shall not be obligated to make any such sale pursuant to
any such notice. The Collateral Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for the sale, and such sale
may be made at any time or place to which the same may be so adjourned. In case
of any sale of all or any part of the Collateral on credit or for future
delivery, the Collateral so sold may be retained by the Collateral Agent until
the selling price is paid by the purchaser thereof, but the Collateral Agent
shall not incur any liability in case of the failure of such purchaser to take
up and pay for the Collateral so sold and, in case of any such failure, such
Collateral may again be sold upon like notice. The Collateral Agent, instead of
exercising the power of sale herein conferred upon it, may proceed by a suit or
suits at law or in equity to foreclose the security interests and sell the
Collateral, or any portion thereof, under a judgment or decree of a court or
courts of competent jurisdiction.
(b) Power of Attorney. The Collateral Agent is hereby irrevocably
-----------------
appointed the true and lawful attorney of the Pledgor with full power and
authority, in the name and stead
15
<PAGE>
of the Pledgor, to do all of the following: (i) upon any delivery or sale of all
or any part of any Collateral made either under the power of delivery or sale
given hereunder or under judgment or decree in any judicial proceedings for
foreclosure or otherwise for the enforcement of this Collateral Agreement, to
make all necessary deeds, bills of sale and instruments of assignment, transfer
or conveyance of the property thus delivered or sold; (ii) upon the occurrence
of an Adjustment Event while any shares of Common Stock are Pledged Items, to
take any necessary actions with respect to such shares of Common Stock to cause
the Pledged Items to conform to the requirements of this Agreement following the
occurrence of the Adjustment Event, including, without limitation, the tender of
shares of Common Stock and the sale of property (other than Reported Securities)
received in respect of Common Stock. For such purposes the Collateral Agent may
execute all necessary documents and instruments. This power of attorney shall be
deemed coupled with an interest, and the Pledgor hereby ratifies and confirms
all that its attorneys acting under such power, or such attorneys' successors or
agents, shall lawfully do by virtue of this Collateral Agreement. If so
requested by the Collateral Agent, by the Trustees or by any purchaser of the
Collateral or a portion thereof, the Pledgor shall further ratify and confirm
any such delivery or sale by executing and delivering to the Collateral Agent,
to the Trustees or to such purchaser or purchasers at the expense of the Pledgor
all proper deeds, bills of sale, instruments of assignment, conveyance of
transfer and releases as may be designated in any such request. The Pledgor's
obligations and authorizations hereunder shall not be terminated by operation of
law or the occurrence of any event whatsoever, including the death or disability
of the Pledgor, or the occurrence of any other event.
(c) Application of Collateral and Proceeds. In the case of an Event
--------------------------------------
of Default, the Collateral Agent may proceed to realize upon the security
interest in the Collateral against any one or more of the types of Collateral,
at any one time, as the Collateral Agent shall determine in its sole discretion
subject to the foregoing provisions of this Section 8. The proceeds of any sale
of, or other realization upon, or other receipt from, any of the Collateral
remaining after delivery to the Trust pursuant to Section 8(a) shall be applied
by the Collateral Agent in the following order of priorities:
(1) first, to the payment to the Trust of an amount equal to: (A) the
aggregate Market Value of a number of shares of Common Stock equal to
(1) the number of shares of Common Stock required to be delivered
under the Purchase Agreement on the Delivery Date minus (2) the number
of shares of Common Stock delivered by the Collateral Agent to the
Trust on the Delivery Date as described above; or (B) from and after
an Adjustment Event, the sum of (1) the Cash Delivery Obligations on
the Delivery Date and (2) the aggregate Market Value on the Delivery
Date of a number of Reported Securities (and, if applicable, shares of
Common Stock) equal to (x) the number thereof required to be delivered
on the Delivery Date under Section 6.2 of the Purchase Agreement minus
(y) the number thereof delivered by the Collateral Agent to the Trust
on the Delivery Date as described above; or (C) if the Pledgor shall
have exercised its Cash Delivery Option, the amount of cash required
to be delivered under Section 1.3(d) of the Purchase Agreement minus
the amount of cash so delivered; and (D) if the Pledgor shall have
extended the Exchange Date pursuant to Section 1.3(f) of the Purchase
Agreement, the amount of cash required to be delivered under said
Section 1.3(f)
16
<PAGE>
(or, if the Pledgor shall have accelerated the Exchange Date pursuant
to Section 1.3(g) thereof, the amount of cash deliverable pursuant to
said Section 1.3(g));
(2) second, to the payment to the Collateral Agent of the expenses of such
sale or other realization, including reasonable compensation to the
Collateral Agent and its agents and counsel, and all expenses,
liabilities and advances incurred or made by the Collateral Agent in
connection therewith, including brokerage fees in connection with the
sale by the Collateral Agent of any Pledged Item; and
(3) finally, if all of the obligations of the Pledgor hereunder and under
the Purchase Agreement have been fully discharged or sufficient funds
have been set aside by the Collateral Agent at the request of the
Pledgor for the discharge thereof, any remaining proceeds shall be
released to the Pledgor.
9. The Collateral Agent.
--------------------
The Collateral Agent accepts its duties and responsibilities hereunder
as agent for the Trust, on and subject to the following terms and conditions:
(a) Performance of Duties. The Collateral Agent undertakes to perform
---------------------
such duties and only such duties as are expressly set forth herein and, beyond
the exercise of reasonable care in the performance of such duties, no implied
covenants or obligations shall be read into this Collateral Agreement against
the Collateral Agent. No provision hereof shall be construed to relieve the
Collateral Agent from liability for its own grossly negligent action, grossly
negligent failure to act or its own willful misconduct, subject to the
following:
(1) The Collateral Agent may consult with counsel, and the advice
or opinion of such counsel shall be full and complete authorization and
protection in respect of an action taken or suffered hereunder in good
faith and in accordance with such advice or opinion of counsel.
(2) The Collateral Agent shall not be liable with respect to any
action taken, suffered or omitted by it in good faith (i) reasonably
believed by it to be authorized or within the discretion or rights or
powers conferred on it by this Collateral Agreement or (ii) in accordance
with any direction or request of the Trustees.
(3) The Collateral Agent shall not be liable for any error of
judgment made in good faith by any of its officers, unless the Collateral
Agent was grossly negligent in ascertaining the pertinent facts.
(4) In the absence of bad faith on its part, the Collateral Agent
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any note, notice,
resolution, consent, certificate, affidavit, letter, telegram, teletype
message, statement, order or other document believed by it to be genuine
and correct and to have been signed or sent by the proper Person or
Persons.
(5) No provision of this Collateral Agreement shall require the
Collateral Agent to expend or risk its own funds or otherwise incur any
financial liability
17
<PAGE>
in the performance of any of its duties hereunder, or in the exercise of
any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
(6) The Collateral Agent may perform any duties hereunder either
directly or by or through agents or attorneys, and the Collateral Agent
shall not be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder. In
furtherance thereof, any subsidiary owned or controlled by the Collateral
Agent, or its successors, as agent for the Collateral Agent, may perform
any or all of the duties of the Collateral Agent relating to the valuation
of securities and other instruments constituting Collateral hereunder.
(7) In no event shall the Collateral Agent be personally liable
for any taxes or other governmental charges imposed upon or in respect of
(i) the collateral or (ii) the income or other distributions thereon.
(8) Unless and until the Collateral Agent shall have received
notice from the Pledgor, or unless and until a Responsible Officer of the
Collateral Agent shall have actual knowledge to the contrary, the
Collateral Agent shall be entitled to deem and treat all Collateral
delivered to it hereunder as Eligible Collateral hereunder, provided that
the Collateral Agent has carried out the duties specified in Section 6 with
respect to such Collateral at the time of delivery thereof.
The Collateral Agent shall not be responsible for the correctness of
the recitals and statements herein which are made by the Pledgor or for any
statement or certificate delivered by the Pledgor pursuant hereto. Except as
specifically provided herein, the Collateral Agent shall not be responsible for
the validity, sufficiency, collectibility or marketability of any Collateral
given to or held by it hereunder or for the validity or sufficiency of the
Purchase Agreement or the Lien on the Collateral purported to be created hereby.
(b) Knowledge. The Collateral Agent shall not be deemed to have
---------
knowledge of any Event of Default (except a Collateral Event of Default), unless
and until a Responsible Officer of the Collateral Agent shall have actual
knowledge thereof or shall have received written notice thereof.
(c) Merger. Any corporation or association into which the Collateral
------
Agent may be converted or merged, or with which it may be consolidated, or to
which it may sell or transfer its agency business and assets as a whole or
substantially as a whole, or any corporation or association resulting from any
such conversion, sale, merger, consolidation or transfer to which it is a party,
shall, subject to the prior written consent of the Trust, be and become a
successor Collateral Agent hereunder and vested with all of the title to the
Collateral and all of the powers, discretions, immunities, privileges and other
matters as was its predecessor without, except as provided above, the execution
or filing of any instrument or any further act, deed or conveyance on the part
of any of the parties hereto, anything herein to the contrary notwithstanding.
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<PAGE>
(d) Resignation. The Collateral Agent and any successor Collateral
-----------
Agent may at any time resign by giving thirty days' written notice by registered
or certified mail to the Pledgor and notice to the Trust in accordance with the
provisions of Section 10(d) hereof. Such resignation shall take effect upon the
appointment of a successor Collateral Agent by the Trust.
(e) Removal. The Collateral Agent may be removed at any time by an
-------
instrument or concurrent instruments in writing delivered to the Collateral
Agent and to the Pledgor and signed by the Trust.
(f) Appointment of Successor. (1) If the Collateral Agent hereunder
------------------------
shall resign or be removed, or be dissolved or shall be in the course of
dissolution or liquidation or otherwise become incapable of action hereunder, or
if it shall be taken under the control of any public officer or officers or of a
receiver appointed by a court, a successor may be appointed by the Trust by an
instrument or concurrent instruments in writing signed by the Trust or by its
attorneys in fact fully authorized a copy of such instrument or concurrent
instruments shall be sent by registered mail to the Pledgor.
(2) Every such temporary or permanent successor Collateral Agent
appointed pursuant to the provisions hereof shall be a trust company or bank in
good standing, having a reported capital and surplus of not less than
$100,000,000 and capable of holding the Collateral in the State of New York, if
there be such an institution willing, qualified and able to accept the duties of
the Collateral Agent hereunder upon customary terms.
(g) Acceptance by Successor. Every temporary or permanent successor
-----------------------
Collateral Agent appointed hereunder shall execute, acknowledge and deliver to
its predecessor and also to the Pledgor an instrument in writing accepting such
appointment hereunder, whereupon such successor, without any further act, deed
or conveyance, shall become fully vested with all the estates, properties,
rights, powers, duties and obligations of its predecessors. Such predecessor
shall, nevertheless, on the written request of its successor or the Pledgor,
execute and deliver an instrument transferring to such successor all the
estates, properties, rights and powers of such predecessor hereunder. Every
predecessor Collateral Agent shall deliver all Collateral held by it as the
Collateral Agent hereunder to its successor. Should any instrument in writing
from the Pledgor be required by a successor Collateral Agent for more fully and
certainly vesting in such successor the estates, properties, rights, powers,
duties and obligations hereby vested or intended to be vested in the
predecessor, any and all such instruments in writing shall, at the request of
the temporary or permanent successor Collateral Agent, be forthwith executed,
acknowledged and delivered by the Pledgor.
10. Miscellaneous.
-------------
(a) Benefit of Agreement; Successors and Assigns. Whenever any of the
--------------------------------------------
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party. All the covenants and agreements herein
contained by or on behalf of the Pledgor and the Collateral Agent shall bind,
and inure to the benefit of, their respective successors and assigns whether so
expressed or not, and shall be enforceable by and inure to the benefit of the
Trust and its successors and assigns. [This Agreement will be binding on and
legally enforceable against the Pledgor, despite the death or legal incapacity
of any settlor or beneficiary thereof.]
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(b) Separability. To the extent permitted by law, the
------------
unenforceability or invalidity of any provision or provisions of this Collateral
Agreement shall not render any other provision or provisions herein contained
unenforceable or invalid.
(c) Amendments and Waivers. Any term, covenant, agreement or
----------------------
condition of this Collateral Agreement may be amended or compliance therewith
may be waived (either generally or in a particular instance and either
retrospectively or prospectively) but only by a writing signed by the Collateral
Agent, the Pledgor and the Trust.
(d) Notices.
-------
(1) Any notice provided for herein, unless otherwise specified,
shall be in writing (including transmittals by telex or telecopier) and
shall be given to a party at the address set forth opposite such party's
name on the signature pages hereto or at such other address as may be
designated by notice duly given in accordance with this Section 10(d) to
each other party hereto.
(2) Each such notice given pursuant to paragraph (1) shall be
effective (i) if sent by certified mail (return receipt requested), 72
hours after being deposited in the United States mail, postage prepaid;
(ii) if given by telex or telecopier, when such telex or telecopied notice
is transmitted; or (iii) if given by any other means, when delivered at the
address specified in this Section 10(d).
(e) Governing Law. This Collateral Agreement shall in all respects be
-------------
construed in accordance with and governed by the laws of the State of New York;
provided that as to Pledged Items located in any jurisdiction other than the
State of New York, the Collateral Agent on behalf of the Trust shall have all of
the rights to which a secured party is entitled under the laws of such other
jurisdiction.
(f) Counterparts. This Collateral Agreement may be executed,
------------
acknowledged and delivered in any number of counterparts and such counterparts
taken together shall constitute one and the same instrument.
(g) Application of Bankruptcy Code. The parties hereto acknowledge and
------------------------------
agree that the Collateral Agent is a "financial institution" within the meaning
of Section 101(22) of Title 11 of the United States Code (the "Bankruptcy Code")
---------------
and is acting as agent and custodian for the Trust in connection with the
Purchase Agreement and that the Trust is a "customer" of the Collateral Agent
within the meaning of said Section 101(22).
(h) WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
--------------------
THE PARTIES HERETO HEREBY WAIVE AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER
AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN
RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR
BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR TORT OR OTHERWISE. EACH
PARTY HERETO ACKNOWLEDGES THAT IT OR HE HAS BEEN INFORMED BY THE OTHER PARTY
HERETO THAT THE PROVISIONS OF THIS
20
<PAGE>
SECTION CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH SUCH OTHER PARTY HERETO HAS
RELIED, IS RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT AND ANY
DOCUMENT RELATED THERETO. EACH PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OF
THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER
PARTY HERETO TO THE WAIVER OF ITS RIGHTS TO TRIAL BY JURY.
11. Termination of Collateral Agreement.
-----------------------------------
This Collateral Agreement and the rights hereby granted by the Pledgor
in the Collateral shall cease, terminate and be void upon fulfillment of all of
the obligations of the Pledgor under the Purchase Agreement, and the Pledgor
shall have no further liability hereunder upon such termination. Any Collateral
remaining at the time of such termination shall be fully released and discharged
from the Lien hereof and delivered to the Pledgor by the Collateral Agent, all
at the expense of the Pledgor.
12. No Personal Liability of Trustees.
---------------------------------
By executing this Collateral Agreement none of the Trustees assumes
any personal liability hereunder.
21
<PAGE>
IN WITNESS WHEREOF, each of the Pledgor, the Collateral Agent and the Trust has
caused this Collateral Agreement to be duly executed on its behalf as of the
date hereof.
PLEDGOR:
-----------------------------------
By:
-----------------------------------
Name:
Title:
Address for Notices:
-----------------------------------
Attention:
-----------------------------------
THE TRUST:
DECS TRUST V
By:
--------------------------------
Donald J. Puglisi,
as Trustee
By:
--------------------------------
William R. Latham, III,
as Trustee
By:
--------------------------------
James B. O'Neill,
as Trustee
Address for Notices:
850 Library Avenue - Suite 204
Newark, DE 19715
-----------------------------------
Attention: Donald J. Puglisi
-----------------------------------
<PAGE>
COLLATERAL AGENT:
The Bank of New York
as Collateral Agent
By:
-----------------------------------
Name: Betty Cocozza
Title: Assistant Vice President
Address for Notices:
101 Barclay Street, 12 E Floor
New York, NY 10286
-----------------------------------
Attention: Betty Cocozza
-----------------------------------
2
<PAGE>
Exhibit A
to
Collateral Agreement
CERTIFICATE FOR SUBSTITUTED COLLATERAL
The undersigned, _____________ (the "Pledgor"), hereby certifies, pursuant to
-------
Section 6(b) of the Collateral Agreement dated as of , 1999 among
the Pledgor, The Bank of New York, as Collateral Agent, and DECS Trust V (the
"Collateral Agreement"; terms defined in the Collateral Agreement being used
- ---------------------
herein as defined therein), that:
1. The Pledgor is delivering the following securities to the
Collateral Agent to be held by the Collateral Agent as substituted Collateral
(the "Substituted Collateral"):
----------------------
2. The Pledgor requests that the Collateral Agent transfer to the
Pledgor the following Prior Collateral, pursuant to Section 6(b) of the
Collateral Agreement:
3. The Pledgor hereby represents and warrants to the Collateral Agent
and the Trust that:
(a) Consents to Transfer. No Transfer Restrictions exist
--------------------
with respect to or otherwise apply to the assignment of, or transfer
by the Pledgor of possession of, any items of Substituted Collateral
to the Collateral Agent under the Collateral Agreement, or the
subsequent sale or transfer of such items of Substituted Collateral by
the Collateral Agent pursuant to the terms of the Collateral
Agreement.
(b) Title to Collateral; Perfected Security Interest. The
------------------------------------------------
Pledgor has good and marketable title to the Substituted Collateral,
free of all Liens (other than the Lien created by the Collateral
Agreement) and Transfer Restrictions. Upon delivery of the Collateral
to the Collateral Agent, the Collateral Agent will obtain a valid,
first priority perfected security interest in, and a first lien upon,
such Substituted Collateral subject to no other Lien. None of such
Substituted Collateral is or shall be pledged by the Pledgor as
collateral for any other purpose.
This Certificate may be relied upon by the Trust as fully and to the
same extent as if this Certificate had been specifically addressed to the Trust.
A-1
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
_____ day of ______, 1999.
Name:
Title:
A-2
<PAGE>
Exhibit B
to
Collateral Agreement
CERTIFICATE FOR ADDITIONAL GOVERNMENT SECURITIES
The undersigned, __________________ (the "Pledgor"), hereby certifies,
-------
pursuant to Section 6(c) of the Collateral Agreement, dated as of
, 1999, among the Pledgor, The Bank of New York, as Collateral Agent, and DECS
Trust V (the "Collateral Agreement"; terms defined in the Collateral Agreement
--------------------
being used herein as defined therein), that:
1. The Pledgor is delivering the following securities to the
Collateral Agent to be held by the Collateral Agent as Collateral deliverable in
connection with Pledgor's option to extend the Exchange Date in accordance with
Section 1.3(f) of the Purchase Agreement (the "Additional Government
---------------------
Securities"):
2. The Pledgor hereby represents and warrants to the Collateral Agent
that:
(a) Consents to Transfer. No Transfer Restrictions exist with
--------------------
respect to or otherwise apply to the assignment of, or transfer by the
Pledgor of possession of, any items of Additional Government Securities to
the Collateral Agent under the Collateral Agreement, or the subsequent sale
or transfer of such items of Additional Government Securities by the
Collateral Agent pursuant to the terms of the Collateral Agreement.
(b) Title to Collateral; Perfected Security Interest. The
------------------------------------------------
Pledgor has good and marketable title to the Additional Government
Securities, free of all Liens (other than the Lien created by the
Collateral Agreement) and Transfer Restrictions. Upon delivery of the
Collateral to the Collateral Agent, the Collateral Agent will obtain a
valid, first priority perfected security interest in, and a first lien
upon, such Additional Government Securities subject to no other Lien.
None of such Additional Government Securities is or shall be pledged by the
Pledgor as collateral for any other purpose.
This Certificate may be relied upon by the Trust as fully and to the
same extent as if this Certificate had been specifically addressed to the Trust.
B-1
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
_____ day of _____ 1999.
Name:
Title:
<PAGE>
Exhibit C
to
Collateral Agreement
CERTIFICATE FOR ADDITIONAL COLLATERAL
The undersigned, __________________ (the "Pledgor"), hereby certifies,
-------
pursuant to Section 6(c) of the Collateral Agreement, dated as of
, 1999, among the Pledgor, The Bank of New York, as Collateral Agent, and DECS
Trust V (the "Collateral Agreement"; terms defined in the Collateral Agreement
--------------------
being used herein as defined therein), that:
1. The Pledgor is delivering the following securities to the
Collateral Agent to be held by the Collateral Agent as additional Collateral
(the "Additional Collateral"):
---------------------
2. The Pledgor hereby represents and warrants to the Collateral Agent
that:
(a) Consents to Transfer. No Transfer Restrictions exist with
--------------------
respect to or otherwise apply to the assignment of, or transfer by the
Pledgor of possession of, any items of Additional Collateral to the
Collateral Agent under the Collateral Agreement, or the subsequent sale or
transfer of such items of Additional Collateral by the Collateral Agent
pursuant to the terms of the Collateral Agreement.
(b) Title to Collateral; Perfected Security Interest. The
------------------------------------------------
Pledgor has good and marketable title to the Additional Collateral, free of
all Liens (other than the Lien created by the Collateral Agreement) and
Transfer Restrictions. Upon delivery of the Collateral to the Collateral
Agent, the Collateral Agent will obtain a valid, first priority perfected
security interest in, and a first lien upon, such additional Collateral
subject to no other Lien. None of such Additional Collateral is or shall
be pledged by the Pledgor as collateral for any other purpose.
This Certificate may be relied upon by the Trust as fully and to the
same extent as if this Certificate had been specifically addressed to the Trust.
C-1
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
_____ day of _____ 1999.
Name:
Title:
C-1
<PAGE>
EXHIBIT (k)(5)
CGSH Draft of 7/27/99
FUND EXPENSE AGREEMENT
Agreement dated as of , 1999 between Salomon Smith
Barney Inc. ("Salomon Smith Barney") and The Bank of New York (the "Service
-------------------- -------
Provider"), in its capacities as administrator, custodian, paying agent and
- --------
collateral agent for DECS Trust V (the "Trust").
-----
WHEREAS the Trust is a statutory business trust organized under the
Business Trust Act of the State of Delaware pursuant to a Declaration of Trust
dated as of April 22, 1999, as amended and restated as of July 14, 1999, and as
further amended and restated as of , 1999 (the "Trust
-----
Agreement"); and
- ---------
WHEREAS Salomon Smith Barney desires to make provision for the payment
of certain initial and ongoing expenses of the Trust.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the parties agree as follows:
1. Definitions. (a) Capitalized terms used herein and not defined
herein shall have the meanings ascribed thereto in the Trust Agreement.
(b) The following terms shall have the following meanings:
"Additional Expense" means the Ordinary Expense the incurring of which
------------------
will require the Service Provider to provide the Additional Expense Notice
pursuant to Section 3(a) hereof and any Ordinary Expense incurred thereafter.
"Additional Expense Notice" means the notice required to be given by
-------------------------
the Service Provider to Salomon Smith Barney pursuant to Section 3(a)(i) hereof.
"Closing Date" shall have the meaning ascribed thereto in the
------------
Underwriting Agreement.
"Ordinary Expense" of the Trust means any expense of the Trust other
----------------
than any expense of the Trust arising under Sections 2.2(e) and 6.6 of the
Administration Agreement, Section 15 of the Custodian Agreement, Section 5.4(b)
of the Paying Agent Agreement and Section 7.6 of the Trust Agreement.
"Up-front Fee Amount" means the amount set forth as such on Schedule I
-------------------
hereto payable as a one-time payment to the Service Provider in respect of its
collective services as Administrator, Custodian, Paying Agent and Collateral
Agent for the entire term of the Trust.
"Up-front Expense Amount" means the amount set forth as such on
-----------------------
Schedule I hereto payable as a one-time payment to the Service Provider in
respect of Ordinary Expenses anticipated to be incurred by the Administrator on
behalf of the Trust, pursuant to the Administration Agreement, during the term
of the Trust.
<PAGE>
2. Agreement to Pay Up-front Fees and Expenses. Salomon Smith Barney
agrees to pay to the Service Provider in New York Clearing House funds on the
Closing Date the Up-front Fee Amount and the Up-front Expense Amount.
3. Agreement to Pay Additional Expenses. (a) Prior to incurring any
Ordinary Expense on behalf of the Trust that, together with all prior Ordinary
Expenses incurred by the Administrator on behalf of the Trust, would cause the
aggregate amount of Ordinary Expenses of the Trust to exceed the Up-front
Expense Amount, the Administrator shall provide to Salomon Smith Barney (i)
prompt written notice to the effect that the aggregate amount of Ordinary
Expenses of the Trust will exceed the Up-front Expense Amount, and (ii) an
accounting, in such detail as shall be reasonably acceptable to Salomon Smith
Barney, of all Ordinary Expenses incurred on behalf of the Trust through the
date of the Additional Expense Notice.
(b) From and after the date of the Additional Expense Notice, the
Service Provider agrees that it will not, without the prior written consent of
Salomon Smith Barney, incur on behalf of the Trust (i) any single expense in
excess of $3,000 or (ii) in any calendar quarter, expenses aggregating in excess
of $15,000. Subject to the foregoing, the Service Provider shall give notice to
Salomon Smith Barney in writing promptly following the incurring of any
Additional Expense. Such notice shall be accompanied by any demand, bill,
invoice or other similar document in respect of such Additional Expense.
(c) Subject to the first sentence of paragraph (b) of this Section 3,
Salomon Smith Barney agrees to pay to the Service Provider from time to time the
amount of any Additional Expense. Payment by Salomon Smith Barney of any
Additional Expense shall be made in New York Clearing House funds by the later
of (i) five Business Days after the receipt by Salomon Smith Barney of written
notice from the Service Provider of the incurring thereof or (ii) the due date
for the payment of such Additional Expense.
(d) Salomon Smith Barney may contest in good faith the reasonableness
of any Additional Expense and the parties shall attempt to resolve amicably the
disagreement; provided that if the parties cannot resolve the dispute by the due
date hereunder with respect to such Additional Expense, subject to the first
sentence of paragraph (b) of this Section 3, Salomon Smith Barney shall pay the
amount of such Additional Expense, subject to later adjustment and credit if
such dispute is resolved in favor of Salomon Smith Barney.
4. Condition to Payment. The obligations of Salomon Smith Barney
hereunder shall be subject to the condition that the Trust's DECS shall have
been issued and paid for on the Closing Date.
5. Trust Termination; Refund of Unused Expense Funds. If at the
termination of the Trust in accordance with Section 8.3 of the Trust Agreement
the aggregate amount of Ordinary Expenses incurred by the Service Provider on
behalf of the Trust through the date of termination shall be less than the Up-
front Expense Amount, the Service Provider shall, promptly following the date of
such termination, pay to Salomon Smith Barney in New York Clearing House funds
the amount of such excess.
2
<PAGE>
6. Termination of Administration Agreement. If the Administration
Agreement is terminated in accordance with Section 4.1 thereof, the Service
Provider shall promptly pay to Salomon Smith Barney (i) the ratable portion of
its Up-front Fee Amount for the period from the date of the termination of the
Administration Agreement to the Exchange Date and (ii) any unexpended portion of
the Up-front Expense Amount.
7. Statements and Reports. The Service Provider shall collect and
safekeep all demands, bills, invoices or other written communications received
from third parties in connection with any Ordinary Expenses and Additional
Expenses and shall prepare and maintain adequate books and records showing all
receipts and disbursements of funds in connection therewith. Salomon Smith
Barney shall have the right to inspect and to copy, at its expense, all such
documents, books and records at all reasonable times and from time to time
during the term of this Agreement.
8. Term of Contract. This Agreement shall continue in effect until
the termination of the Trust in accordance with Section 8.3 of the Trust
Agreement.
9. No Assignment. No party to this Agreement may assign its rights
or delegate its duties hereunder without the prior written consent of the other
party.
10. Amendments. The Service Provider agrees that it will not
consent to any amendment to any of the Administration Agreement, the Custodian
Agreement, the Paying Agent Agreement or the Collateral Agreement without the
prior written consent of Salomon Smith Barney.
11. Entire Agreement. This Agreement contains the entire agreement
among the parties with respect to the matters contained herein and supersedes
all prior agreements or understandings. No amendment or modification of this
Agreement shall be valid unless the amendment or modification is in writing and
is signed by all the parties to this Agreement.
12. Notices. All notices, demands, reports, statements, approvals
or consents given by any party under this Agreement shall be in writing and
shall be delivered in person or by telecopy or other facsimile communication or
sent by first-class U.S. mail, registered or certified, postage prepaid, to the
appropriate party at its address on the signature pages hereof or at such other
address subsequently notified to the other parties hereto. A copy of any
communication to Salomon Smith Barney shall be furnished to Cleary, Gottlieb,
Steen & Hamilton, One Liberty Plaza, New York, New York 10006, Attention:
Raymond B. Check, provided that in each case the failure to furnish such copy
shall not affect the effectiveness of any such communication. Any party may
change its address for purposes hereof by delivering a written notice of the
change to the other parties. All notices given under this Agreement shall be
deemed received (a) in the case of hand delivery, on the day of delivery, (b) in
the case of telecopy or other facsimile communication, on the day of
transmission, and (c) in the case of mailing, on the third day after such notice
was deposited in the mail.
13. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
3
<PAGE>
14. Governing Law. This Agreement shall be governed by and be
construed in accordance with the laws of the State of New York.
15. Counterparts. This Agreement may be signed in counterpart with
all of such counterparts constituting one and the same instrument.
4
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their authorized representatives as of the date first above written.
SALOMON SMITH BARNEY INC.
By:
------------------------------------
Name:
Title:
Address: 388 Greenwich Street
New York, New York 10013
Attention:
THE BANK OF NEW YORK
By:
------------------------------------
Name:
Title:
Address: 101 Barclay Street
New York, New York 10286
<PAGE>
SCHEDULE I
to Fund Expense Agreement
Up-front Fee Amount: $[ ]
Up-front Expense Amount: $[ ]
6
<PAGE>
EXHIBIT (k)(6)
CGSH Draft of 7/27/99
FUND INDEMNITY AGREEMENT
Agreement dated as of , 1999 between Salomon Smith
Barney Inc. ("Salomon Smith Barney") and DECS Trust V (such trust and the
--------------------
trustees thereof acting in their capacity as such being referred to herein as
the "Trust").
-----
WHEREAS the Trust is a statutory business trust organized under the
Business Trust Act of the State of Delaware pursuant to a Declaration of Trust
dated as of April 22, 1999, as amended and restated as of July 14, 1999, and as
further amended and restated as of , 1999 (the "Trust Agreement");
---------------
and
WHEREAS, Salomon Smith Barney, as sponsor under the Trust Agreement,
desires to make provision for the payment of certain indemnification expenses of
the Trust.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the parties agree as follows:
1. Definitions. Capitalized terms used herein and not defined
herein shall have the meanings ascribed thereto in the Trust Agreement.
2. Agreement to Pay Expenses. Salomon Smith Barney agrees to pay
to the Trust, and hold the Trust harmless from, any expenses of the Trust
arising under Sections 2.2(e) and 6.6 of the Administration Agreement, Section
15 of the Custodian Agreement, Section 5.4(b) of the Paying Agent Agreement and
Section 7.6 of the Trust Agreement (collectively, together with any amounts paid
pursuant to paragraph 4 of this Agreement, "Indemnification Expenses"). Subject
------------------------
to paragraph 4 hereof, payment hereunder by Salomon Smith Barney shall be made
in New York Clearing House funds no later than five Business Days after the
receipt by Salomon Smith Barney, pursuant to paragraph 3 hereof, of written
notice of any claim for Indemnification Expenses.
3. Notice of Receipt of Claim. The Trust shall give notice to, or
cause notice to be given to, Salomon Smith Barney in writing of any claim for
Indemnification Expenses or any threatened claim for Indemnification Expenses
immediately upon the Trust acquiring knowledge thereof. Such written notice
shall be accompanied by any demand, bill, invoice or other communication
received from any third party claimant (a "Claimant") in respect of such
--------
Indemnification Expense.
4. Right to Contest. The Trust agrees that Salomon Smith Barney
may, and Salomon Smith Barney is authorized on behalf of the Trust to, contest
in good faith with any Claimant any amount contained in any claim for
Indemnification Expense, provided, that if, within such time period as Salomon
Smith Barney shall determine to be reasonable, Salomon Smith Barney and such
Claimant are unable to resolve amicably any disagreement regarding such claim
for Indemnification Expense, Salomon Smith Barney shall retain counsel
reasonably satisfactory to the Trustees to represent the Trustees in any
resulting proceeding and shall pay the fees and disbursements of such counsel
related to such proceeding. Notwithstanding any other provision herein, it is
understood that (a) Salomon Smith Barney shall not, in respect of the legal
<PAGE>
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel), and (b) Salomon
Smith Barney shall not be liable for any settlement of any proceeding effected
without its written consent, but if settled with such consent or if there be a
final judgment for the Claimant, Salomon Smith Barney agrees to indemnify the
Trust from and against any loss or liability by reason of such settlement or
judgment.
5. Statements and Reports. The Trust shall collect and safekeep
all demands, bills, invoices or other written communications received from third
parties in connection with any claim for Indemnification Expenses and shall
prepare and maintain adequate books and records showing all receipts and
disbursements of funds in connection therewith. Salomon Smith Barney shall have
the right to inspect and to copy, at its expense, all such documents, books and
records at all reasonable times and from time to time during the term of this
Agreement.
6. Term of Contract. This Agreement shall continue in effect until
the termination of the Trust in accordance with Section 8.3 of the Trust
Agreement.
7. No Assignment. No party to this Agreement may assign its rights
or delegate its duties hereunder without the prior written consent of the other
parties, except that the Trust may delegate any and all duties hereunder to the
Administrator to the extent permitted by law.
8. Entire Agreement. This Agreement contains the entire agreement
among the parties with respect to the matters contained herein and supersedes
all prior agreements or understandings. No amendment or modification of this
Agreement shall be valid unless the amendment or modification is in writing and
is signed by all the parties to this Agreement.
9. Notices. All notices, demands, reports, statements, approvals
or consents given by any party under this Agreement shall be in writing and
shall be delivered in person or by telecopy or other facsimile communication or
sent by first-class U.S. mail, registered or certified, postage prepaid, to the
appropriate party at its address on the signature pages hereof or at such other
address subsequently notified to the other parties hereto. A copy of any
communication to Salomon Smith Barney shall be furnished to Cleary, Gottlieb,
Steen & Hamilton, One Liberty Plaza, New York, New York 10006, Attention:
Raymond B. Check, provided that the failure to furnish such copy shall not
affect the effectiveness of any such communication. Any party may change its
address for purposes hereof by delivering a written notice of the change to the
other parties. All notices given under this Agreement shall be deemed received
(a) in the case of hand delivery, on the day of delivery, (b) in the case of
telecopy or other facsimile communication, on the day of transmission, and (c)
in the case of mailing, on the third day after such notice was deposited in the
mail.
10. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
11. Governing Law. This Agreement shall be governed by and be
construed in accordance with the laws of the State of New York.
2
<PAGE>
12. Counterparts. This Agreement may be signed in counterpart with
all of such counterparts constituting one and the same instrument.
3
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their authorized representatives the date first above written.
SALOMON SMITH BARNEY INC.
By:
-------------------------------------
Address: 388 Greenwich Street
New York, New York 10013
Attention:
DECS TRUST V
By:
-------------------------------------
Donald J. Puglisi,
as Managing Trustee
Address: c/o Puglisi & Associates
850 Library Avenue,
Suite 204
Newark, Delaware 19716
<PAGE>
EXHIBIT (l)
[Letterhead of Richard, Layton & Finger]
August 5, 1999
Salomon Smith Barney Inc.
Goldman, Sachs & Co.
388 Greenwich Street
New York, NY 10013
Re: DECS Trust V
------------
Ladies and Gentlemen:
We have acted as special Delaware counsel for DECS Trust V, a Delaware
business trust (the "Trust"), in connection with the matters set forth herein.
-----
At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of executed or
conformed counterparts, or copies otherwise proved to our satisfaction, of the
following:
(a) The Certificate of Trust of the Trust (the "Original Certificate
--------------------
of Trust"), dated April 22, 1999, as filed in the office of the Secretary of
- --------
State of the State of Delaware (the "Secretary of State") on April 22, 1999;
------------------
(b) The Amended and Restated Certificate of Trust (the "First
-----
Restated Certificated of Trust"), dated July 14, 1999, as filed with the
- ------------------------------
Secretary of State on July 14, 1999;
(c) The Restated Certificate of Trust of the Trust (the "Restated
--------
Certificate of Trust"; and together with the Original Certificate of Trust, and
- --------------------
the First Restated Certificate of Trust, the "Certificate of Trust"), dated
--------------------
August 5, 1999, as filed in the office of the Secretary of State on August 5,
1999;
(d) The Declaration of Trust of the Trust, dated as of April 22,
1999, between Alan Rifkin, as sponsor (the "Initial Sponsor"), and Donald J.
---------------
Puglisi, as trustee;
(e) The Amended and Restated Declaration of Trust (the "First Amended
-------------
and Restated Declaration of Trust"), dated July 14, 1999, by and among the
- ---------------------------------
Initial Sponsor, Tyler Dickson (the "Initial Trustee") and Donald J. Puglisi;
---------------
(f) The Amended and Restated Declaration of Trust of the Trust, dated
as of August 4, 1999 (the "Trust Agreement"), among the Initial Sponsor, the
---------------
Initial Trustee, Salomon Smith Barney Inc., as sponsor, Donald J. Puglisi,
William R. Latham III and James B. O'Neil, as trustees (the "Trustees"), and the
--------
Holders (as defined in the Trust Agreement), including Exhibit A attached
thereto;
<PAGE>
Salomon Smith Barney Inc.
Goldman, Sachs & Co.
August 5, 1999
Page 2
(g) The registration statement (the "Initial Registration Statement")
------------------------------
on Form N-2, including a prospectus (the "Prospectus"), relating to the issuance
of up to 5,645,000 DECS of the Trust representing undivided beneficial interests
in the assets of the Trust (the "DECS "), as filed by the Trust with the
----
Securities and Exchange Commission (the "SEC") on July 29, 1999, as amended by
---
Pre-Effective Amendment No. 1 to the Initial Registration Statement ("Amendment
---------
No. 1"), filed by the Trust with the SEC on August 5, 1999 (the Initial
- -----
Registration Statement, as amended by Amendment No. 1 being hereinafter referred
to as the "Registration Statement");
----------------------
(h) A Certificate of Good Standing for the Trust, dated August 5,
1999, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed above, and we have assumed that there exists no
provision in any document that we have not reviewed that bears upon or is
inconsistent with the opinions stated herein. We have conducted no independent
factual investigation of our own but rather have relied solely upon the
foregoing documents, the statements and information set forth therein and the
additional matters recited or assumed herein, all of which we have assumed to be
true, complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed that (i)
all signatures on documents examined by us are genuine, (ii) all documents
submitted to us as originals are authentic, and (iii) all documents submitted to
us as copies conform with the original copies of those documents.
For purposes of this opinion, we have assumed (i) that the Trust
Agreement and the Certificate of Trust constitute the entire agreement among the
parties thereto with respect to the subject matter thereof, including with
respect to the creation, operation and termination of the Trust, and that the
Trust Agreement and the Certificate of Trust are in full force and effect and
have not been amended, (ii) except to the extent provided in paragraph 1 below,
the due creation or due organization or due formation, as the case may be, and
valid existence in good standing of each party to the documents examined by us
under the laws of the jurisdiction governing its creation, organization or
formation, (iii) that at least one of the Trustees is a resident of the State of
Delaware, (iv) the legal capacity of natural persons who are parties to the
documents examined by us, (v) except as provided in paragraphs 2 and 4 below,
that each of the parties to the documents examined by us has the power and
authority to execute and deliver, and to perform its obligations under, such
documents, (vi) except as provided in paragraph 5 below, the due authorization,
execution and delivery by all parties thereto of all documents examined by us,
(vii) the receipt by each Person to whom a DECS is to be issued by the Trust
(collectively, the "DECS Holders") of an interest in the DECS Certificate
------------
(substantially in the form of Exhibit A to the Trust Agreement) and the payment
for the DECS acquired by it, in accordance with the
<PAGE>
Salomon Smith Barney Inc.
Goldman, Sachs & Co.
August 5, 1999
Page 3
Trust Agreement and the Registration Statement, and (viii) that the DECS are
issued and sold to the DECS Holders in accordance with the Trust Agreement and
the Registration Statement. We have not participated in the preparation of the
Registration Statement and assume no responsibility for its contents.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinions on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder that are currently in effect.
Based upon the foregoing, and upon our examination of such questions
of law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act, 12 Del. C.
-------
(S) 3801, et seq. (the "Business Trust Act"), and all filings required under the
-- --- ------------------
laws of the State of Delaware with respect to the creation and valid existence
of the Trust as a business trust have been made.
2. When issued and sold, the DECS will represent valid and, subject
to the qualifications set forth in paragraph 3 below, fully paid and
nonassessable undivided beneficial interests in the assets of the Trust.
3. The DECS Holders, as beneficial owners of the Trust, will be
entitled to the same limitation of personal liability extended to stockholders
of private corporations for profit organized under the General Corporation Law
of the State of Delaware. We note that the DECS Holders may be obligated to make
payments as set forth in the Declaration.
We consent to the filing of this opinion with the SEC as an exhibit to
the Registration Statement. In addition, we hereby consent to the use of our
name under the heading "Legal Matters" in the Prospectus. In giving the
foregoing consent, we do not thereby admit that we come within the category of
Persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the rules and regulations of the SEC thereunder. Except as
stated above, without our prior written consent, this opinion may not be
furnished or quoted to, or relied upon by, any other Person for any purpose.
Very truly yours,
By: /s/ Richards, Layton & Finger
------------------------------
<PAGE>
EXHIBIT (n)(1)
[CLEARY, GOTTLIEB, STEEN & HAMILTON LETTERHEAD]
August 5, 1999
DECS Trust V
c/o Puglisi & Associates
850 Library Avenue, Suite 204
Newark, Delaware 19715
Ladies and Gentlemen:
We have acted as special tax counsel to DECS Trust V (the "Trust") in
connection with the registration statement on Form N-2 of the Trust (the
"Registration Statement") with the Securities and Exchange Commission and hereby
confirm to you the discussion as set forth under the heading "Certain United
States Federal Income Tax Considerations" in the Prospectus included in the
Registration Statement.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Prospectus. In giving such consent, we do not thereby admit
that we are in the capacity of persons whose consent is required under Section 7
of the Act.
Very truly yours,
Cleary, Gottlieb, Steen & Hamilton
By: /s/ Erika W. Nijenhuis
---------------------------------
Erika W. Nijenhuis, a Partner
<PAGE>
PRICEWATERHOUSECOOPERS [LOGO]
- --------------------------------------------------------------------------------
PricewaterhouseCoopers LLP
1301 Avenue of the Americas
New York NY 10019-6013
Telephone (212) 259-1000
Facsimile (212) 259-1301
Consent of Independent Accountants
We consent to the inclusion in the Registration Statement of DECS Trust V on
Form N-2 filed with the Securities and Exchange Commission on or about August 5,
1999 of our report dated August 5, 1999 on our audit of the Statement of Assets
Liabilities and Capital of DECS Trust V as of August 5, 1999. We also consent to
the reference to our firm under the caption "Experts."
/s/ PricewaterhouseCoopers, LLP
New York, New York
August 5, 1999
<PAGE>
EXHIBIT (N)(3)
CONSENT TO BEING NAMED AS TRUSTEE
The undersigned hereby consents to being named in the Registration
Statement on Form N-2 of DECS Trust V (the "Trust") and any amendments thereto,
as a person about to become a Trustee of the Trust.
Dated as of August 4, 1999
/s/ Donald J. Puglisi
---------------------
Donald J. Puglisi
<PAGE>
CONSENT TO BEING NAMED AS TRUSTEE
The undersigned hereby consents to being named in the Registration
Statement on Form N-2 of DECS Trust V (the "Trust") and any amendments thereto,
as a person about to become a Trustee of the Trust.
Dated as of August 4, 1999
/s/ James B. O'Neill
---------------------
James B. O'Neill
<PAGE>
CONSENT TO BEING NAMED AS TRUSTEE
The undersigned hereby consents to being named in the Registration
Statement on Form N-2 of DECS Trust V (the "Trust") and any amendments thereto,
as a person about to become a Trustee of the Trust.
Dated as of August 4, 1999
/s/ William R. Latham, III
-------------------------
William R. Latham, III
<PAGE>
EXHIBIT (p)
SUBSCRIPTION AGREEMENT
This SUBSCRIPTION AGREEMENT dated as of the 4th day of August, 1999,
is entered into between DECS Trust V, a statutory business trust organized under
the Business Trust Act of the State of Delaware (such trust and the trustees
thereof acting in their capacity as such being referred to herein as the
"Trust"), and Salomon Smith Barney Inc. (the "Purchaser").
----- ---------
WHEREAS, the Purchaser has heretofore transferred to the Trust the
amount of $100.00 (the "Purchase Price") for the purpose and with the intent of
--------------
purchasing one DECS (the "Subscription DECS"), representing an undivided
beneficial interest in the Trust; and
WHEREAS, the Trust wishes to transfer to the Purchaser, in
consideration of the Purchase Price, the Subscription DECS.
NOW THEREFORE, the parties hereto agree as follows:
1. Purchase and Sale of the DECS.
-----------------------------
1.1. Sale and Issuance of DECS. Subject to the terms and conditions
-------------------------
of this Agreement, the Trust agrees to sell to the Purchaser in consideration of
the Purchaser's delivery to the Trust of the Purchase Price, and the Purchaser
agrees to purchase from the Trust, one DECS (the "Subscription DECS"),
-----------------
representing an undivided beneficial interest in the Trust.
1.2. Closing. (a) The closing of the purchase and sale of the
-------
Subscription DECS shall take place at the offices of Cleary, Gottlieb, Steen &
Hamilton, One Liberty Plaza, New York, New York 10006 at , on
, 1999, or at such other time (the "Closing Date") and place as the Trust and
------------
the Purchaser mutually agree upon. At or after the Closing Date, the Trust
shall deliver to the Purchaser a certificate representing the Subscription DECS,
registered in the name of the Purchaser or its nominee.
(b) The Trust hereby acknowledges Purchaser's delivery to the Trust of
the Purchase Price on April 23, 1999.
2. Representations, Warranties and Covenants of the Purchaser. The
----------------------------------------------------------
Purchaser hereby represents and warrants to, and covenants for the benefit of,
the Trust that:
2.1. Purchase Entirely for Own Account. This Agreement is made by
---------------------------------
the Trust with the Purchaser in reliance upon the Purchaser's representation to
the Trust, which by the Purchaser's execution of this Agreement the Purchaser
hereby confirms, that the Purchaser is acquiring the Subscription DECS for
investment for the Purchaser's own account, and not as a nominee or agent and
not with a view to the resale or distribution by the Purchaser of such
Subscription DECS, and that the Purchaser has no present intention of selling,
granting any participation in, or otherwise distributing the Subscription DECS,
in either case in violation of any securities registration requirement under
applicable law, but subject nevertheless to any requirement of law that the
disposition of its property shall at all times be within its control. By
<PAGE>
executing this Agreement, the Purchaser further represents that the Purchaser
does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person, or to any third
person, with respect to the Subscription DECS.
2.2. Investment Experience. The Purchaser acknowledges that it can
---------------------
bear the economic risk of the investment for an indefinite period of time and
has such knowledge and experience in financial and business matters (and
particularly in the business in which the Trust operates) as to be capable of
evaluating the merits and risks of the investment in the Subscription DECS. The
Purchaser is an "accredited investor" as defined in Rule 501(a) of Regulation D
under the Securities Act of 1933 (the "Act").
---
2.3. Restricted Securities. The Purchaser understands that the
---------------------
Subscription DECS are characterized as "restricted securities" under the United
States securities laws inasmuch as they are being acquired from the Trust in a
transaction not involving a public offering and that under such laws and
applicable regulations such Subscription DECS may be resold without registration
under the Act only in certain circumstances. In this connection, the Purchaser
represents that it understands the resale limitations imposed by the Act and is
generally familiar with the existing resale limitations imposed by Rule 144
under the Act.
2.4. Further Limitations on Disposition. The Purchaser further
----------------------------------
agrees not to make any disposition directly or indirectly of all or any portion
of the Subscription DECS unless and until:
(a) There is then in effect a registration statement under the Act
covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
(b) The Purchaser shall have furnished the Trust with an opinion of
counsel, reasonably satisfactory to the Trust, that such disposition
will not require registration of such Subscription DECS under the Act.
(c) Notwithstanding the provisions of subsections (a) and (b) above,
no such registration statement or opinion of counsel shall be
necessary for a transfer by the Purchaser to any affiliate of the
Purchaser, if the transferee agrees in writing to be subject to the
terms hereof to the same extent as if it were the original Purchaser
hereunder.
2.5. Legends. It is understood that the certificate evidencing the
-------
Subscription DECS may bear either or both of the following legends:
(a) "These securities have not been registered under the Securities
Act of 1933. They may not be sold, offered for sale, pledged or
hypothecated in the absence of a registration statement in effect with
respect to the securities under
2
<PAGE>
such Act or an opinion of counsel reasonably satisfactory to the
Trustee of DECS Trust V that such registration is not required."
(b) Any legend required by the laws of any other applicable
jurisdiction.
The Purchaser and the Trust agree that the legend contained in
paragraph (a) above shall be removed at a holder's request when it is no longer
necessary to ensure compliance with federal securities laws.
2.6. Amendment to Declaration of Trust; Split of DECS. The Purchaser
------------------------------------------------
consents to (a) the execution and delivery by the Trustees and Salomon Smith
Barney Inc., as sponsor of the Trust, of an Amended and Restated Declaration of
Trust substantially in the form attached hereto and (b) the split of the
Subscription DECS subsequent to the determination of the public offering price
per DECS and related underwriting discount for the DECS to be sold to the
Underwriter (as defined in such Amended and Restated Declaration of Trust) but
prior to the sale of the DECS to the Underwriters into a greater number of DECS
so that immediately following such split the value of the Subscription DECS will
equal the aforesaid public offering price per DECS.
2.7. Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
2.8. Governing Law. This Agreement shall be governed by and
-------------
construed and interpreted in accordance with the laws of the State of New York
applicable to agreements made and to be performed wholly within such state.
3
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
DECS TRUST V
By /s/ Tyler Dickson
------------------------------
Tyler Dickson, as Trustee
SALOMON SMITH BARNEY INC.
By /s/ Anthony S. Graham
------------------------------
Name: Anthony S. Graham
Title: Director
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> AUG-05-1999
<PERIOD-END> AUG-05-1999
<INVESTMENTS-AT-COST> 100
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 100
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 100
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
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<NET-ASSETS> 100
<DIVIDEND-INCOME> 0
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<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
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<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
</TABLE>
