<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 12, 1998.
REGISTRATION NO. 333-50179
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CELLULAR COMMUNICATIONS INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 4812 13-3221852
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NO.) IDENTIFICATION NO.)
110 EAST 59TH STREET
NEW YORK, NY 10022
(212) 906-8480
</TABLE>
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
RICHARD J. LUBASCH, ESQ.
SENIOR VICE PRESIDENT -- GENERAL COUNSEL AND SECRETARY
CELLULAR COMMUNICATIONS INTERNATIONAL, INC.
110 EAST 59TH STREET
NEW YORK, NY 10022
(212) 906-8480
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPY TO:
THOMAS H. KENNEDY, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE
NEW YORK, NY 10022
(212) 735-3000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================================================
TITLE OF EACH CLASS OF AMOUNT TO PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED OFFERING PRICE PER SECURITY(1) AGGREGATE OFFERING PRICE(1) REGISTRATION FEE(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9 1/2% Senior Discount
Notes Due 2005.......... $253,565,000(2) 100% $253,565,000(2) $74,802(3)
=================================================================================================================================
</TABLE>
(1) Determined in accordance with Rule 457(f) promulgated under the Securities
Act of 1933, as amended.
(2) Reflects the U.S. dollar equivalent of any such securities denominated in
EUROs based on an exchange rate of US$1.00 to ECU .9298 (as defined in the
Prospectus included herein) on April 7, 1998.
(3) Previously paid.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON EACH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(a), MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION DATED MAY 12, 1998
PROSPECTUS
, 1998
OFFER FOR ALL OUTSTANDING 9 1/2% SENIOR DISCOUNT NOTES DUE 2005
IN EXCHANGE FOR 9 1/2% SENIOR DISCOUNT NOTES DUE 2005,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OF
CELLULAR COMMUNICATIONS LOGO
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON JUNE 12, 1998, UNLESS EXTENDED.
Cellular Communications International, Inc., a Delaware corporation (the
"Company"), hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and the accompanying Letter of Transmittal (which
together constitute the "Exchange Offer"), to exchange an aggregate principal
amount at maturity of up to EURO 235,000,000 of 9 1/2% Senior Discount Notes Due
2005 (the "New Notes") of the Company, which have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), for a like principal
amount at maturity of the issued and outstanding 9 1/2% Senior Discount Notes
Due 2005 (the "Old Notes" and, together with the New Notes, the "Notes") of the
Company from the holders (the "Holders") thereof. The terms of the New Notes are
identical in all material respects to the Old Notes except (i) that the New
Notes have been registered under the Securities Act, (ii) for certain transfer
restrictions and registration rights relating to the Old Notes and (iii) that
the New Notes will not contain certain provisions relating to Liquidated Damages
(as defined) to be paid to Holders of Old Notes under certain circumstances
relating to the timing of the Exchange Offer.
On March 18, 1998, the Company issued EURO 235,000,000 principal amount of
Old Notes (the "Offering") concurrently with an offering of 6% Convertible Notes
(the "Convertible Notes") due 2005 (the "Concurrent Offering" and, together with
the Offering, the "Offerings"). The Old Notes were issued pursuant to exemptions
from, or in transactions not subject to, the registration requirements of the
Securities Act and applicable state securities laws.
The New Notes will be senior unsecured obligations of the Company and will
rank senior in right of payment to future subordinated indebtedness of the
Company. The New Notes will be effectively subordinated to all indebtedness and
liabilities of the Company's Subsidiaries and Minority Owned Affiliates (as
defined). As of December 31, 1997, after giving effect to the Offerings and the
application of the net proceeds therefrom, the aggregate principal amount of
indebtedness of the Company would have been $281.8 million and the aggregate
amount of indebtedness and other liabilities of the Company's subsidiaries and
Minority Owned Affiliates would have been $1.4 billion, including $832 million
of indebtedness of Omnitel Pronto Italia S.p.A. ("OPI"), a Minority Owned
Affiliate. See "Business -- Omnitel and OPI."
The Old Notes were issued at a substantial discount to their principal
amount and generated gross proceeds of EURO 147 million (approximately $159.6
million on the date of issuance). See "The ECU and the EURO" and "Description of
the Notes -- Principal, Maturity and Interest." The issue price of each Old Note
represented a yield to maturity of 9 1/2% (computed on a semiannual bond
equivalent basis) calculated from March 18, 1998. The New Notes will accrete at
a rate of 9 1/2%, compounded semiannually, to an aggregate amount of EURO
235,000,000 on April 1, 2003 and cash interest on the New Notes will be payable
on April 1 and October 1 of each year at a rate of 9 1/2% per annum. The New
Notes will be redeemable at the option of the Company, in whole or in part, on
or after April 1, 2002, at the redemption prices set forth herein plus accrued
interest to the date of redemption. See "Description of the Notes -- Optional
Redemption."
(Continued on following page)
SEE "RISK FACTORS" ON PAGE 8 OF THIS PROSPECTUS FOR A DESCRIPTION OF
CERTAIN FACTORS TO BE CONSIDERED BY HOLDERS WHO TENDER THEIR OLD NOTES IN THE
EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE> 3
(Continued from previous page)
The Indenture governing the New Notes will limit the ability of the Company
to incur additional Indebtedness (as defined). The Indenture will also provide
that, upon a Change of Control (as defined), holders of New Notes will have the
right to require the Company to purchase the New Notes at a price of 101% of the
Accreted Value (as defined) thereof to the date of purchase prior to April 1,
2003 or 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest to the date of purchase on or after April 1, 2003. See "Description of
the Notes."
For each Old Note accepted for exchange, the Holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Old Note. Old Notes accepted for exchange will cease to accrete value or accrue
interest from and after the date of consummation of the Exchange Offer. Holders
of Old Notes whose Old Notes are accepted for exchange will not receive any
payment in respect of accrued interest on such Old Notes.
The New Notes are being offered hereunder in order to satisfy certain
obligations of the Company contained in the Registration Rights Agreement (as
defined herein). Based on interpretations by the staff of the Securities and
Exchange Commission (the "Commission"), as set forth in no-action letters issued
to third parties, the Company believes that New Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be offered for resale, resold and
otherwise transferred by Holders thereof (other than any Holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act), without compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such New Notes are acquired in
the ordinary course of such Holder's business and such Holder, other than
broker-dealers, has no arrangement with any person to engage in a distribution
of such New Notes. However, the Commission has not considered the Exchange Offer
in the context of a no-action letter and there can be no assurance that the
staff of the Commission would make a similar determination with respect to the
Exchange Offer as in such other circumstances. Each Holder, other than a
broker-dealer, must acknowledge that it is not engaged in, and does not intend
to engage in, a distribution of such New Notes and has no arrangement or
understanding to participate in a distribution of New Notes. If any Holder is an
affiliate of the Company, is engaged in or intends to engage in or has any
arrangement with any person to participate in the distribution of the New Notes
to be acquired pursuant to the Exchange Offer, such Holder (i) could not rely on
the applicable interpretations of the staff of the Commission and (ii) must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. Each broker-dealer
that receives New Notes for its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Notes received in exchange for
Old Notes where such Old Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 90 days after the Expiration Date (as defined herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution."
The Company will not receive any proceeds from the Exchange Offer. The
Company will pay all the expenses incident to the Exchange Offer. Tenders of Old
Notes pursuant to the Exchange Offer may be withdrawn at any time prior to the
Expiration Date. In the event the Company terminates the Exchange Offer and does
not accept for exchange any Old Notes, the Company will promptly return the Old
Notes to the Holders thereof. See "The Exchange Offer."
There is no existing trading market for the New Notes, and there can be no
assurance regarding the future development of a market for the New Notes. The
Initial Purchasers (as defined herein) have advised the Company that they
currently intend to make a market in the New Notes. The Initial Purchasers are
not obligated to do so, however, and any market-making with respect to the New
Notes may be discontinued at any time without notice.
In this Prospectus, references to "lire" or "lira" are to the lawful
currency of Italy, references to "U.S. dollars," "dollars," or "$" are to the
lawful currency of the United States, references to "ECU" are to the ECU
(Continued on following page)
ii
<PAGE> 4
(Continued from previous page)
referred to in Article 109g of the Treaty establishing the European Communities,
as amended by the Treaty on European Union (the "Treaty") and as defined in
Council Regulation (EC) No. 3320/94, that is from time to time used as the unit
of account of the European Communities ("EC") and references to "EURO" are to
the currency of the EC to be introduced at the start of the third stage of
European economic and monetary union, currently expected to occur in 1999
pursuant to the Treaty. Until the start of such third stage, all monetary rights
and obligations in respect of the New Notes shall be performed in ECU at the
rate of one ECU for one EURO. Solely for the convenience of the reader, this
Prospectus contains translations of certain lire amounts into U.S. dollars.
These translations should not be construed as representations that the lire
amounts actually represent such U.S. dollar amounts or could have been or could
be or will be converted into U.S. dollars at the rate indicated or at any other
rate. Unless otherwise indicated, the translations of lire into U.S. dollars
have been made at 1,817.00 lire per U.S. dollar, the noon buying rate in The
City of New York for cable transfers in lire as certified for customs purposes
by the Federal Reserve Bank of New York (the "Noon Buying Rate") on April 7,
1998. See "Exchange Rates" for information regarding the Noon Buying Rate for
the past five fiscal years.
For purposes of information only, on April 7, 1998, the rate of exchange
between ECU and lire was approximately ECU 1 = 1,960.19 lire and the rate of
exchange between ECU and U.S. dollars was approximately ECU 1 = 1.079 U.S.
dollars.
The Securities will be represented by a single global certificate in
registered form (the "Global Note"), registered in the name of and deposited
with The Chase Manhattan Bank London, as common depositary (the "Common
Depositary") for Morgan Guaranty Trust Company of New York as operator (the
"Euroclear Operator") of the Euroclear System ("Euroclear") and Cedel Bank,
societe anonyme ("Cedel"). Interests in the Securities may be acquired through
the book-entry facilities of the Euroclear Operator and Cedel. The Securities
will be issued in registered form in minimum denominations of EURO 1000 and
integral multiples thereof. See "Description of the Notes" for further
discussion of these matters and for definitions of certain of the defined terms
used in this paragraph.
iii
<PAGE> 5
AVAILABLE INFORMATION
The Company is currently subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements, information statements and
other information with the Commission. Any reports, proxy statements,
information statements and other information filed by the Company with the
Commission may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's Regional Offices located
at Suite 1400, Northwestern Atrium Center, 5000 West Madison Street, Chicago, IL
60661 and 13th Floor, Seven World Trade Center, New York, New York 10048, and
copies of such material may also be obtained by mail from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission also maintains a site on the World Wide Web,
the address of which is http://www.sec.gov. that contains reports, proxy and
information statements and other information regarding issuers, such as the
Company, that file electronically with the Commission. Such reports, proxy
statements and other information concerning the Company also may be inspected at
the offices of the Nasdaq Stock Market, Report Section, at 1735 K Street,
Washington, D.C. 20006.
The Company has filed with the Commission a registration statement on Form
S-4 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act with respect to the New Notes
offered hereby. This Prospectus, which forms a part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement and the exhibits thereto, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the New Notes offered hereby,
reference is made to the Registration Statement. Any statements made in this
Prospectus concerning the provisions of certain documents are not necessarily
complete and, in each instance, reference is made to the copy of such filed as
an exhibit to the Registration Statement otherwise filed with the Commission.
In the event that the Company is not required to be subject to the
reporting requirements of the Exchange Act in the future, the Company will be
required under the Indenture pursuant to which the Old Notes were, and the New
Notes will be, issued, to continue to file with the Commission, and to furnish
the Holders of the New Notes with, the information, documents and other reports
specified in Sections 13 and 15(d) of the Exchange Act.
INFORMATION INCORPORATED BY REFERENCE
The Company's Annual Report on Form 10-K and Form 10-K/A-1 for the fiscal
year ended December 31, 1997, and its Proxy Statement for its Annual Meeting of
Stockholders have been filed with the Commission and are incorporated by
reference herein and made a part of this Prospectus. All documents filed by the
Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of this
Exchange Offer shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modified or supersedes such statement. Any such
statement so modified or superseded shall not be deemed to constitute a part of
this Prospectus except as so modified or superseded. Copies of the documents
incorporated by reference will be made available free of charge at the office of
the Company's agent in Luxembourg, Banque Internationale a Luxembourg S.A. (the
"Luxembourg Agent").
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated by reference herein, other than
exhibits to such documents unless such exhibits are specifically incorporated by
reference into such document or herein. Any such request should be directed to
the Company at 110 East 59th Street, New York, New York 10022, telephone number
(212) 906-8480, attention: General Counsel.
iv
<PAGE> 6
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS: ALL STATEMENTS OTHER THAN
STATEMENTS OF HISTORICAL FACT CONTAINED IN THIS PROSPECTUS, INCLUDING WITHOUT
LIMITATION CERTAIN STATEMENTS IN THE "PROSPECTUS SUMMARY," AND "BUSINESS"
CONCERNING THE COMPANY'S FINANCIAL POSITION AND LIQUIDITY, RESULTS OF OPERATIONS
AND OTHER MATTERS, ARE FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING STATEMENTS IN
THIS PROSPECTUS GENERALLY ARE ACCOMPANIED BY WORDS SUCH AS "ANTICIPATE,"
"BELIEVE," "ESTIMATE" OR "EXPECT" OR SIMILAR STATEMENTS. ALTHOUGH THE COMPANY
BELIEVES THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE
REASONABLE, NO ASSURANCE CAN BE GIVEN THAT SUCH EXPECTATIONS WILL PROVE CORRECT.
FACTORS THAT COULD CAUSE THE COMPANY'S RESULTS TO DIFFER MATERIALLY FROM THE
RESULTS DISCUSSED IN SUCH FORWARD-LOOKING STATEMENTS INCLUDE BUT ARE NOT LIMITED
TO OPI'S ABILITY TO CONTINUE TO DESIGN NETWORK ROUTES, INSTALL FACILITIES,
OBTAIN AND MAINTAIN ANY REQUIRED GOVERNMENTAL LICENSES OR APPROVALS AND FINANCE
CONSTRUCTION AND DEVELOPMENT, ALL IN A TIMELY MANNER, AT REASONABLE COSTS AND ON
SATISFACTORY TERMS AND CONDITIONS, AS WELL AS ASSUMPTIONS ABOUT CUSTOMER
ACCEPTANCE, CHURN RATES, OVERALL MARKET PENETRATION AND COMPETITION FROM
PROVIDERS OF ALTERNATIVE SERVICES. ALL FORWARD-LOOKING STATEMENTS IN THIS
PROSPECTUS ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY
STATEMENTS IN THIS PARAGRAPH.
v
<PAGE> 7
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in, or incorporated by reference in, this Prospectus. Italian lire
have been translated solely for the convenience of the reader of this Prospectus
at an exchange rate of 1,817.00 lire per U.S. dollar, the Noon Buying Rate on
April 7, 1998. Capitalized terms used and not otherwise defined in this summary
have the meanings given to them elsewhere in this Prospectus, including in the
glossary in Appendix A.
THE COMPANY
The Company currently holds a 14.667% interest in Omnitel-Sistemi
Radiocellulari Italiani S.p.A. ("Omnitel"), a joint venture which holds a 70%
interest in and directs the management of OPI, a joint venture with Pronto
Italia, S.p.A. ("Pronto Italia"). OPI has been awarded one of two national
cellular telephone licenses for Italy using Global System for Mobile
Communications ("GSM") technology, the digital technology for cellular telephone
systems that European Union countries have agreed to adopt as a common standard.
The Company, through its 14.667% interest in Omnitel, holds an approximate
10.267% interest in OPI. The Company was incorporated in 1984 to own and operate
cellular telephone systems in various markets. Beginning in 1988, the Company
entered into joint ventures to pursue opportunities in wireless communications
businesses outside of the United States.
The Company believes that OPI's launch as Italy's second mobile
telecommunications operator has been one of the most successful in wireless
history. Since the start-up of its GSM system in December 1995, OPI has not only
achieved comparable coverage to its much larger and longer established
competitor, but has attracted over 2.5 million subscribers. As of December 31,
1997, management believes that OPI had approximately 30% of the GSM market and
21% of the total cellular market in Italy, with its cellular network covering
over 95% of the Italian population. In the quarter ending June 30, 1997, OPI
generated positive EBITDA for the first time.
Over the past several years and aided by OPI's entrance, the Italian
cellular market has consistently surpassed growth estimates to become the
largest market in Europe. At the end of 1997, Italy had approximately 11.7
million subscribers, an increase of over 80% over the 6.4 million subscribers at
the end of 1996. With Italy's population of 58 million, the Company believes
there is still substantial unmet demand for cellular services. As in the United
States, the Italian economy is characterized by a large number of small and
medium-sized businesses, which are heavy users of cellular services. The
competitive dynamics of the Italian market have proven to be favorable to both
the incumbent cellular operator, Telecom Italia Mobile S.p.A. ("TIM"), and OPI.
These dynamics include limited handset subsidies, calling party pays (leading to
lower churn and higher revenues) and prepaid calling packages (resulting in more
intensive distribution, lower bad debts and billing expenses and reduced
customer service requirements).
OPI's objective is to provide high quality GSM digital cellular services,
in terms of the amount and depth of coverage, call completion and customer
service. Through its association with Ing. C. Olivetti & C., S.p.A. ("Olivetti")
and some of the world's leading GSM network operators, OPI has followed a
business plan that is consistent with the current cellular market in Italy, but
also expansive in that it envisions the gradual integration of wireless and
wireline telecommunications markets in order to service customer
telecommunications needs. See "Business -- Omnitel and OPI -- Market Overview."
OPI has capitalized on the expertise and experience of its Corporate Partners
(as defined herein), including the Company, in designing, constructing and
operating cellular networks, in order to build and manage a cellular system that
is responsive to customer needs, offers superior technical performance in terms
of the amount and depth of coverage and provides innovative voice and data
services.
------------------------
The Company's principal executive office is located at 110 East 59th
Street, New York, New York 10022 and its telephone number is (212) 906-8480. The
registered office of the Company is located at 9 Loockerman Street, Dover,
Delaware 19901.
1
<PAGE> 8
CORPORATE ORGANIZATION
As of December 31, 1997
[COMPANY FLOW CHART]
* OliMan is 75% owned by Olivetti and 25% by Mannesman (with Mannesman having
the right to increase its stake to 49.9%).
** AirTouch has the right to increase its stake to 69.4%, which would reduce the
stake held by the Other Partners to 0%.
2
<PAGE> 9
THE EXCHANGE OFFER
On March 18, 1998, the Company issued EURO 235,000,000 principal amount of
Old Notes. The Old Notes were sold pursuant to exemptions from, or in
transactions not subject to, the registration requirements of the Securities Act
and applicable state securities laws, in order to enable the Company to raise
funds on a more expeditious basis than necessarily would have been possible had
the initial sale been pursuant to an offering registered under the Securities
Act. Donaldson, Lufkin & Jenrette International, Donaldson, Lufkin & Jenrette
Securities Corporation and Wasserstein Perella Securities, Inc. (the "Initial
Purchasers"), as a condition to their purchase of the Old Notes, requested that
the Company agree to commence the Exchange Offer following the offering of the
Old Notes.
Securities Offered......... Up to EURO 235,000,000 aggregate principal amount
of 9 1/2% Senior Discount Notes Due 2005, which
have been registered under the Securities Act. The
terms of the New Notes and the Old Notes are
identical in all material respects, except (i) that
the New Notes have been registered under the
Securities Act, (ii) for certain transfer
restrictions and registration rights relating to
the Old Notes and (iii) that the New Notes will not
contain certain provisions relating to Liquidated
Damages to be paid to the Holders of Old Notes
under certain circumstances relating to the timing
of the Exchange Offer described below under
"-- Summary Description of the Notes."
The Exchange Offer......... The New Notes are being offered in exchange for a
like principal amount of Old Notes. The issuance of
the New Notes is intended to satisfy obligations of
the Company contained in the Registration Rights
Agreement, dated March 18, 1998, between the
Company and the Initial Purchasers (the
"Registration Rights Agreement"). For procedures
for tendering, see "The Exchange Offer."
Tenders, Expiration Date;
Withdrawal............... The Exchange Offer will expire at 5:00 p.m., New
York City time, on June 12, 1998, or such later
date and time to which it is extended. Each Holder
tendering Old Notes must acknowledge that it is not
engaging in, nor intends to engage in, a
distribution of the New Notes. The tender of Old
Notes pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration Date
(as defined herein). Any Old Note not accepted for
exchange for any reason will be returned without
expense to the tendering Holder thereof as promptly
as practicable after the expiration or termination
of the Exchange Offer.
Federal Income Tax
Considerations........... The exchange pursuant to the Exchange Offer should
not result in any income, gain or loss to the
Holders or the Company for federal income tax
purposes. See "Certain United States Federal Income
Tax Considerations."
Use of Proceeds............ There will be no proceeds to the Company from the
issuance of the New Notes Offered hereby. See "Use
of Proceeds."
Exchange Agent............. The Chase Manhattan Bank is serving as Exchange
Agent in connection with the Exchange Offer.
Shelf Registration
Statement.................. Under certain circumstances, certain holders of
Notes (including holders who are not permitted to
participate in the Exchange Offer or who may not
freely resell New Notes received in the Exchange
Offer) may require the Company to file, and cause
to become effective, a shelf registration statement
under the Securities Act, which would cover resales
of Notes by such holders. See "Description of the
Notes -- Exchange Offer; Registration Rights."
3
<PAGE> 10
CONSEQUENCES OF EXCHANGING OLD NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon, as a
consequence of the issuance of the Old Notes pursuant to exemptions from, or in
transactions not subject to, the registration requirements of the Securities Act
and applicable state securities laws. In general, the Old Notes may not be
offered or sold, unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Company does not currently anticipate that
it will register the Old Notes under the Securities Act. See "Description of the
Notes -- Exchange Offer; Registration Rights." Based on interpretations by the
staff of the Commission, as set forth in no-action letters issued to third
parties, the Company believes that New Notes issued pursuant to the Exchange
Offer in exchange for Old Notes may be offered for resale, resold or otherwise
transferred by Holders thereof (other than any Holder which is an "affiliate" of
the Company within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such New Notes are acquired in the ordinary course
of such Holder's business and such Holder, other than broker-dealers, has no
arrangement with any person to participate in the distribution of such New
Notes. However, the Commission has not considered the Exchange Offer in the
context of a no-action letter and there can be no assurance that the staff of
the Commission would make a similar determination with respect to the Exchange
Offer as in such other circumstances. Each Holder, other than a broker-dealer,
must acknowledge that it is not engaged in, and does not intend to engage in, a
distribution of such New Notes and has no arrangement or understanding to
participate in a distribution of New Notes. Each broker-dealer that receives New
Notes for its own account in exchange for Old Notes must acknowledge that such
Old Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities and that it will deliver a prospectus in
connection with any resale of such New Notes. See "Plan of Distribution." In
addition, to comply with the securities laws of certain jurisdictions, it may be
necessary to qualify for sale or register thereunder the New Notes prior to
offering or selling such New Notes. The Company has agreed, pursuant to the
Registration Rights Agreement, subject to certain limitations specified therein,
to register or qualify the New Notes for offer or sale under the securities laws
of such jurisdictions as any Holder reasonably requests in writing. Unless a
Holder so requests, the Company does not intend to register or qualify the sale
of the New Notes in any such jurisdictions. See "The Exchange
Offer -- Consequences of Exchanging Old Notes."
SUMMARY DESCRIPTION OF THE NOTES
The terms of the New Notes and the Old Notes are identical in all material
respects, except (i) that the New Notes have been registered under the
Securities Act, (ii) for certain transfer restrictions and registration rights
relating to the Old Notes and (iii) that the New Notes will not contain certain
provisions relating to Liquidated Damages to be paid to Holders of Old Notes
under certain circumstances relating to the timing of the Exchange Offer. The
Old Notes were issued at a substantial discount to their principal amount to
generate gross proceeds of approximately EURO 147 million (approximately $161.2
million). See "The ECU and the EURO," "Description of the Notes -- Principal,
Maturity and Interest" and "Certain United States Federal Income Tax
Considerations." The issue price of each Old Note represented a yield to
maturity of 9 1/2% (computed on a semiannual bond equivalent basis) calculated
from March 18, 1998. The New Notes will accrete at a rate of 9 1/2%, compounded
semiannually, to an aggregate amount of EURO 235,000,000 on April 1, 2003, cash
interest on the New Notes will be payable on April 1 and October 1 of each year
at a rate of 9 1/2% per annum. Old Notes accepted for exchange will cease to
accrete value or accrue interest from and after the date of consummation of the
Exchange Offer. Holders of Old Notes whose Old Notes are accepted for exchange
will not receive any payment in respect of Accreted Value on such Old Notes
otherwise payable on any interest payment date the record date for which occurs
on or after the consummation of the Exchange Offer.
Securities Offered......... Up to EURO 235,000,000 aggregate principal amount
of 9 1/2% Senior Discount Notes due 2005, which
have been registered under the Securities Act.
4
<PAGE> 11
Maturity................... April 1, 2005.
Specified Currency......... EURO, being the currency to be introduced at the
start of the third stage of European economic and
monetary union pursuant to the Treaty. Until the
start of such third stage, expected to occur in
1999, all monetary rights and obligations in
respect of the New Notes shall be performed in ECU
at the rate of one ECU for one EURO.
Yield and Interest......... The New Notes will accrete daily at a rate of
9 1/2%, compounded semiannually, to an aggregate
principal amount of EURO 235 million by April 1,
2003. Cash interest will not accrue on the New
Notes prior to April 1, 2003. Thereafter, cash
interest on the New Notes will accrue at the rate
of 9 1/2% per annum and will be payable in cash
semiannually in arrears on April 1 and October 1
commencing on October 1, 2003. See "Description of
the Notes."
Ranking.................... The New Notes will be senior unsecured obligations
of the Company and will rank senior in right of
payment to all future subordinated indebtedness of
the Company. The New Notes will be effectively
subordinated to all secured indebtedness of the
Company, and to all indebtedness and liabilities of
the Company's Subsidiaries and Minority Owned
Affiliates. As of December 31, 1997, after giving
pro forma effect to the Offerings and the
application of the net proceeds therefrom, the
aggregate amount of indebtedness of the Company
would have been $281.8 million and the aggregate
amount of indebtedness and other liabilities of the
Company's Subsidiaries and Minority Owned
Affiliates would have been approximately $1.4
billion, including $832 million of indebtedness of
OPI. See "Business -- Omnitel and OPI."
Original Issue Discount.... The Old Notes were issued at a substantial discount
to their principal amount at maturity and were sold
to investors at a price that yielded gross proceeds
to the Company of approximately $161.2 million. The
Old Notes were offered at an original issue
discount for federal income tax purposes. Thus,
although cash interest will not be payable on the
New Notes prior to October 1, 2003, original issue
discount will accrue from the issue date of the New
Notes and will be included as interest income
periodically (including for periods ending prior to
October 1, 2003) in a holder's gross income for
federal income tax purposes in advance of receipt
of the cash payments to which the income is
attributable. See "Certain United States Federal
Income Tax Considerations."
Optional Redemption........ The New Notes will be redeemable, in whole or in
part, at the option of the Company at any time
after April 1, 2002, at the redemption prices set
forth herein, plus accrued and unpaid interest to
the redemption date. See "Description of the
Notes -- Optional Redemption."
Change of Control.......... In the event of a Change of Control (as defined),
the Company will be required to make an offer to
all holders of New Notes to purchase their New
Notes at an offer price equal to 101% of the
Accreted Value thereon to the date of purchase
prior to April 1, 2003 and 101% of the aggregate
principal amount thereof plus accrued and unpaid
interest to the date of purchase on or after April
1, 2003.
Certain Covenants.......... The Indenture contains certain covenants that,
among other things, will limit the ability of the
Company and its Restricted Subsidiaries from
incurring additional debt, making investments and
restricted payments
5
<PAGE> 12
and from granting any liens and will limit the
ability of the Company to merge, consolidate or
sell all or substantially all of its assets. In
addition, under certain circumstances, the Company
will be required to offer to purchase the New Notes
at a price equal to 100% of the Accreted Value
thereof as of the date of purchase with the
proceeds of certain Asset Sales. Each of these
covenants is subject to a number of important
qualifications and exceptions. See "Description of
the Notes." As of the date of the Indenture, the
Company will not have any Restricted Subsidiaries.
Custody, Clearance and
Settlement............... New Notes exchanged for Old Notes will be eligible
for trading through the facilities of the Euroclear
Operator and Cedel. New Notes traded through the
facilities of the Euroclear Operator and Cedel will
be represented by the Global Note and deposited
with a common depositary for both Morgan Guaranty
Trust Company of New York, Brussels Office, as
operator of the Euroclear System ("Euroclear") and
Cedel.
Use of Proceeds............ The Company will not receive any proceeds from the
issuance of the New Notes offered hereby. $202.0
million of the net proceeds to the Company from the
sale of the Old Notes, together with the proceeds
of the Concurrent Offering were used to repurchase
a portion of the Company's outstanding 13 1/4%
Senior Discount Notes due 2000 (the "Original
Notes") and to pay related fees and expenses. See
"Use of Proceeds and "Capitalization."
Listing.................... The New Notes are expected to be listed on the
Luxembourg Stock Exchange.
RISK FACTORS
In addition to the information contained elsewhere in this Prospectus,
Holders of the Old Notes should carefully consider the matters set forth under
"Risk Factors" before making a decision to tender their Old Notes in the
Exchange Offer.
6
<PAGE> 13
SUMMARY CONSOLIDATED FINANCIAL DATA
The following table sets forth certain financial data for the fiscal years
ended December 31, 1997, 1996 and 1995. The historical financial information has
been derived from the Company's consolidated financial statements (the
"Consolidated Financial Statements") incorporated herein by reference.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1997 1996 1995(1)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenue........................................... $ -- $ -- $ --
Income (loss) before extraordinary item..................... (31,349) (50,968) 6,815
Net income (loss)........................................... (31,349) (50,968) 5,341
Income (loss) before extraordinary item per common share:(2)
Basic..................................................... (1.94) (3.23) .45
Diluted................................................... (1.94) (3.23) .38
Net income (loss) per common share:(2)
Basic..................................................... (1.94) (3.23) .35
Diluted................................................... (1.94) (3.23) .30
Denominator for income (loss) per share calculation:
Basic..................................................... 16,177 15,764 15,346
Diluted................................................... 16,177 15,764 17,713
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
--------------------------
ACTUAL AS ADJUSTED(3)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital............................................. $ 81,992 $ 118,213
Total assets................................................ 140,714 181,428
Long-term debt.............................................. 197,327 281,774
Shareholders' (deficiency).................................. (58,769) (102,501)
</TABLE>
- ------------------------------
(1) 1995 includes a gain on sale of investment in joint venture of $25,286,000,
net of tax of $13,615,000 ($1.43 per common share) and a charge of
$1,474,000, net of income tax benefit of $794,000, from early extinguishment
of debt (($0.08) per common share).
(2) After giving retroactive effect to the 3-for-2 stock split by way of a stock
dividend paid on April 14, 1998.
(3) As adjusted to give pro forma effect to the Offerings and the application of
the net proceeds therefrom as described under "Use of Proceeds." The total
consideration, including the consent payment, (excluding interest paid
pursuant to the tender offer regarding the Original Notes (the "Tender
Offer")) was $869.12 per $1,000 principal amount at maturity of Original
Notes tendered. The change in shareholders' deficiency is the result of an
extraordinary loss on the early extinguishment of debt of $43,732,000
including the write-off of $3,645,000 of deferred financing costs.
7
<PAGE> 14
RISK FACTORS
In addition to the other information contained in this Prospectus, Holders
of Old Notes should consider carefully the following factors in evaluating the
Company and its business before tendering their Old Notes in the Exchange Offer.
The risk factors set forth below (other than "-- Consequences of Failure to
Exchange") are generally applicable to the New Notes as well as the Old Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon as a
consequence of the issuance of the Old Notes pursuant to exemptions from, or in
transactions not subject to, the registration requirements of the Securities Act
and applicable state securities laws. In general, the Old Notes may not be
offered or sold, unless registered under the Securities Act except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. Based on interpretations by the staff of the
Commission, as set forth in no-action letters issued to third parties, the
Company believes that New Notes issued pursuant to the Exchange Offer in
exchange for Old Notes may be offered for resale, resold or otherwise
transferred by Holders thereof (other than any such Holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such New Notes are acquired in
the ordinary course of such Holder's business and such Holder, other than
broker-dealers, has no arrangement with any person to participate in the
distribution of such New Notes. However, the Commission has not considered the
Exchange Offer in the context of a no-action letter and there can be no
assurance that the staff of the Commission would make a similar determination
with respect to the Exchange Offer as in such other circumstances. Each Holder,
other than a broker-dealer, must acknowledge that it is not engaged in, and does
not intend to engage in, a distribution of such New Notes and has no arrangement
or understanding to participate in a distribution of New Notes. If any Holder is
an affiliate of the Company, is engaged in or intends to engage in or has any
arrangement or understanding with respect to the distribution of the New Notes
to be acquired pursuant to the Exchange Offer, such Holder (i) could not rely on
the applicable interpretations of the staff of the Commission and (ii) must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. Each broker-dealer
that receives New Notes for its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Notes received in exchange for
Old Notes where such Old Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 90 days after the Expiration Date, it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution." However, to comply with the securities law
of certain jurisdictions, if applicable, the New Notes may not be offered or
sold unless they have been registered or qualified for sale in such
jurisdictions or an exemption from registration or qualification is available
and is complied with. The Company has agreed, pursuant to the Registration
Rights Agreement, subject to certain limitations specified therein, to register
or qualify the New Notes for offer or sale under the securities laws of such
jurisdictions as any Holder reasonably requests in writing. Unless a Holder so
requests, the Company does not currently intend to register or qualify the sale
of the New Notes in any such jurisdictions. See "The Exchange
Offer -- Consequences of Exchanging Old Notes."
HOLDING COMPANY STRUCTURE; MINORITY INTERESTS; LIMITATIONS ON ACCESS TO CASH
FLOW
The Company is primarily a holding company with limited business operations
of its own. The Company's assets consist primarily of its ownership interest in
Omnitel. The New Notes will be effectively subordinated to all existing and
future indebtedness and other liabilities of OPI, Omnitel and other affiliated
companies, since the Company's right to receive any assets of OPI, Omnitel and
other affiliated companies
8
<PAGE> 15
upon its liquidation or reorganization will be subordinated by operation of law
to claims of such affiliates' creditors (including trade creditors), except to
the extent that the Company is itself recognized as a creditor, in which case
the claims of the Company would still be subordinated to any indebtedness that
is senior in right of payment to the Company's claim. See "Business -- Omnitel
and OPI." As of December 31, 1997, the aggregate amount of indebtedness and
other liabilities of such affiliates was approximately $1.4 billion, including
$832 million of indebtedness of OPI.
The amount of capital required and the need for large numbers of technical
operating personnel has required the Company to participate with financial and
strategic partners. In addition, applicable laws often limit foreign investors
to minority equity positions. The Company does not hold, nor is it likely that
the Company will hold, a majority interest in any operating systems. The
Company's minority voting position in Omnitel currently precludes, and its
minority interest in any future ventures may in the future preclude, it from
controlling the companies in which it has, or may in the future have, an
interest even though the Company is involved in the management of Omnitel and
intends to participate in the future only in operating companies in which it can
be involved in management. Thus, the Company may be unable to cause the
implementation of strategies that it favors and, in the event of a disagreement
between the Company and one or more of such partners, the strategies adopted and
actions taken by Omnitel or by future affiliated companies may in some cases be
contrary to the Company's preferred strategies and actions.
In addition, the Company may be unable to access the cash flow of Omnitel
and OPI since (i) it does not have the requisite control to cause such entities
to pay dividends, and (ii) such entities are parties to credit or other
borrowing agreements that severely restrict the payment of dividends, and such
entities are likely to continue to be subject to such restrictions and
prohibitions for the foreseeable future. See "Business -- Omnitel and OPI -- The
Omnitel Agreement" and "-- The OPI Agreement." As a result, the Company does not
expect to receive significant cash through dividends or other distributions from
its affiliates in the foreseeable future.
SUBSTANTIAL LEVERAGE
The Company is highly leveraged. As of December 31, 1997, the Company's
total indebtedness as adjusted to give effect to the sale of the Old Notes and
the Convertible Notes and the application of net proceeds therefrom, would have
been approximately 157% of its total capitalization. See "Use of Proceeds" and
"Capitalization." In addition, the Indenture relating to the New Notes will
include, among other things, covenants limiting the incurrence of additional
debt and liens and the payment of dividends. See "Description of the
Notes -- Certain Covenants." The degree to which the Company is leveraged and
such covenants may adversely affect the Company's ability to finance its future
operations, to compete effectively against better capitalized competitors and to
withstand downturns in its business or the economy generally, and could limit
its ability to pursue business opportunities that may be in the interests of the
Company and its securityholders.
REPAYMENT RISK
Because the Company does not currently have any cash flow and does not
expect any cash flow for the foreseeable future, its ability to repay the New
Notes at maturity will be dependent on developing one or more sources of cash at
or prior to maturity. The Company may (i) seek to refinance all or a portion of
the New Notes at maturity through sales of additional debt or equity securities
of the Company, (ii) if possible and subject to the appropriate consents and
approvals and certain other limitations set forth in the OPI Agreement (as
defined) and the Omnitel Agreement (as defined), seek to sell the Company or all
or a portion of its interest in Omnitel, (iii) negotiate with its current
financial and strategic partners to permit any cash produced by Omnitel to be
distributed to equity holders rather than invested in the businesses of Omnitel,
and/or (iv) seek to invest in companies that will make substantial cash
distributions on or before the maturity of the Notes. See "-- Marketability of
Assets" and "Business -- Omnitel and OPI -- The Omnitel Agreement" and "-- The
OPI Agreement." There can be no assurance that (i) there will be a market for
the debt or equity securities of the Company in the future, (ii) the Company
will be permitted to sell particular assets or be able to sell assets in a
timely manner or on commercially acceptable terms or in an amount that (giving
effect to
9
<PAGE> 16
the substantial corporate income taxes which could be due in the event of such
sale) will be sufficient to repay the New Notes when due, (iii) the Company will
be able to persuade its financial and strategic partners that cash generated by
the operations of its affiliated entities should be distributed to equity
holders, or (iv) the Company will be able to locate and invest in companies that
will be mature enough to make substantial cash distributions to investors prior
to the maturity of the New Notes, particularly since all of the Company's
potential development opportunities would require substantial new construction
and development.
In addition, as described under the caption "Business -- Omnitel and
OPI -- The Omnitel Agreement," in the event of a bankruptcy, liquidation or
reorganization or similar proceedings of the Company, the other joint venturers
in Omnitel would have the right to purchase the Company's interest in Omnitel at
a cash price equal to the amount of paid-in capital of the Company's interest in
Omnitel. At December 31, 1997, the amount of paid-in capital with respect to the
Company's interest in Omnitel was approximately $96.8 million. It is anticipated
that the amount of cash received by the Company in respect of such a sale of its
interest in Omnitel would be insufficient to repay the New Notes.
MARKETABILITY OF ASSETS
The Company's ability to sell or transfer its ownership interest in Omnitel
is subject to limitations contained in the agreements between the Company and
its strategic and financial partners. See "Business -- Omnitel and OPI -- The
Omnitel Agreement" and "-- The OPI Agreement." In addition, the shareholders of
Omnitel have advised the Ministry of Posts and Telecommunications (now known as
the Ministry of Communications) (the "MOC"), of their intention to collectively
maintain 86% of the share ownership of Omnitel for the first five years of the
License -- more than the 60% stipulated in the OPI Convention. See
"Business -- Regulation -- Public Concessions."
In addition, Omnitel currently has no publicly traded securities and there
can be no guarantee that in the future there will be either a public or private
market for such securities. As a result, the Company's ability to liquidate any
or all of its investment may be substantially limited and there can be no
guarantee that the Company will be able to do so in a timely manner in the event
of an acceleration of the New Notes or in order to satisfy its obligations under
the Indenture in the event of a Change of Control or to pay the New Notes at
maturity.
MANAGEMENT AND CORPORATE OPPORTUNITY CONFLICTS
All but one of the directors of the Company and all but one of the
executive officers of the Company are also directors and/or officers, as the
case may be, of one or both of CoreComm Incorporated ("CoreComm") and NTL
Incorporated ("NTL"). The Company, CoreComm and NTL are each separate publicly
traded corporations that were, historically, subsidiaries of Cellular
Communications, Inc. ("CCI"). As such, there are constraints on the ability of
such directors and officers to devote all or a significant portion of their time
to the Company. The Company has not established any minimum time requirements
for such officers and directors. The Company, CoreComm and NTL share office
space in New York City and NTL provides certain corporate services to each of
the Company and CoreComm. CoreComm and NTL may seek to pursue corporate
opportunities in competition with the Company, in which event such directors and
officers might face conflicting interests. There are no procedures or agreements
which govern the resolution of conflicts among the Company, CoreComm and NTL.
See "Management."
OPERATING LOSSES
The Company has experienced significant losses since its inception. As of
December 31, 1997, the Company had an accumulated deficit of approximately $88.8
million. The Company had operating losses of approximately $9.2 million, $34.0
million and $20.8 million for the fiscal years 1997, 1996 and 1995,
respectively, and expects to incur substantial additional losses in the
foreseeable future as it continues to review wireless opportunities in Europe
from time to time. There can be no assurance that such losses will not continue
indefinitely. The Company has historically obtained the necessary cash for
operations and capital contributions from cash originally contributed by CCI
prior to the distribution of the shares of the Company to
10
<PAGE> 17
CCI shareholders in July 1991 (the "Distribution") and through debt financings.
See "-- Potential Needs for Additional Capital."
DEFICIENCY OF EARNINGS TO FIXED CHARGES
For the years ended December 31, 1997, 1996, 1994 and 1993, the Company's
earnings were insufficient to cover fixed charges by approximately $31.3
million, $52.2 million, $10.5 million and $0.9 million, respectively. Fixed
charges consist of interest expense, including capitalized interest, and
amortization of fees related to debt financing.
LICENSE CONDITION
The continued existence and terms of the License and OPI's frequency
allocations are subject to ongoing review and to modification or early
termination in certain circumstances. While OPI would not normally expect to be
required to cease operations at the end of the term of the License, there can be
no assurance that renewal will be effected at all or on economic terms that are
acceptable to OPI. In addition, the failure of OPI to meet the standards of
service (meaning proper use of frequencies, meeting coverage goals, maintaining
and interconnecting the networks, and prompt payment of license fees) prescribed
in the License could result in the loss of the License and would have a material
adverse effect on OPI and the Company. See "Business -- Legal Proceedings."
PERFORMANCE BOND LIABILITY
The License requires OPI to activate cellular telephone service to cover at
least 70% of Italian territory and 90% of the Italian population by 2000. OPI
has an approximate 219 billion lire ($120.5 million) performance bond
outstanding linked to OPI's meeting certain performance and investment goals and
is subject to monetary penalties for failing to achieve such goals. To date, OPI
believes it has achieved these performance goals as required. In addition, OPI
is required to (i) cover 98% of Italian territory with its cellular network by
May 1998, (ii) invest 1,552 billion lire ($854 million) by May 1998, (iii)
employ 2,686 people by May 1998, (iv) pay royalties to the Ministry of
Communications in amounts that are not less than 25.4 billion lire for 1997
($14.0 million); 51 billion lire for 1998 ($28.1 million) and 77.1 billion lire
for 1999 ($42.4 million), subject in each year to reduction only due to any
proportionate reduction of the royalty percentage to less than 3.5% and (v)
maintain the declared stockholding majority of OPI until February 1, 2000.
Performance goals have been achieved to date, and although no assurance can be
given, the Company believes the future performance goals are achievable. The
maximum liability of the Company under the performance bond would be
approximately 22.5 billion lire ($12.4 million), reflecting its proportionate
interest in OPI.
POTENTIAL NEEDS FOR ADDITIONAL CAPITAL
The acquisition, development, ownership and operation of communications
networks require substantial capital investment. OPI will require capital to add
capacity to its telecommunications networks and for its research and development
programs, operating expenses, expansion of its marketing and distribution
capabilities, license fees and royalties. The Company believes that adequate
funds for these purposes, through OPI debt financing, have been arranged.
The Company may also require additional capital to pursue other
opportunities not currently under consideration. There can be no assurance that
the Company will be able to obtain financing for such investments. If such
financing is unavailable, the number of additional projects in which the Company
participates, if any, may be limited.
COMPETITION
In seeking additional opportunities in various foreign countries, the
Company faces competition from other companies who have significantly greater
financial and other resources than those available to the Company or its
affiliates. There can be no assurance that the Company or its affiliates will be
able to compete
11
<PAGE> 18
effectively against such competitors in obtaining future opportunities. If the
Company or an affiliated company receives a cellular license in a foreign
jurisdiction, the success of the Company or such affiliated company will depend
upon the ability of the Company or such affiliate to compete with other
communication providers in such jurisdiction, including the wireline telephone
provider. In some jurisdictions, the Company or such affiliated company will
compete with established cellular operators which hold greater licensed radio
spectrum, currently serve a significant subscriber base and have significantly
greater financial and other resources than those available to the Company or its
affiliates. The Company and its affiliated companies may also face competition
from emerging technologies and services which might be introduced in the future,
including enhanced specialized mobile radio, Personal Communication Networks
("PCNs") or satellite telephone. There can be no assurance that the Company or
its affiliates will be able to compete effectively against existing wireline and
wireless competitors or new entrants.
In Italy, OPI competes with cellular telephone services offered by TIM and
wireline and wireless local loop telephone services offered by TIM's parent,
Telecom Italia S.p.A. ("Telecom Italia"), formerly Societa Italiana per
L'Esercizio della Telecommunicazioni ("SIP"). TIM has for several years (and
previously through its predecessors Telecom Italia and SIP) operated a 450 MHz
analog cellular system in Italy, and during 1990 commenced service of a 900 MHz
analog cellular system. In 1993, SIP began commercial trials of a GSM cellular
system although full commercial digital service was delayed by the Italian
Government until the award of the second GSM license. TIM has significant
advantages over OPI, including a much larger installed customer base, more
operating spectrum and the Telecom Italia name. In addition, because OPI did not
begin to provide cellular service until late 1995, many potential high usage
business customers already were TIM cellular customers. While OPI and TIM are
currently the only cellular telephone operators licensed in Italy, a third
mobile communications license will reportedly be awarded by May 1998. Bidders
for the third license are expected to include major international
telecommunications companies with considerably greater resources than OPI. In
addition, Telecom Italia launched a low mobility Digital European Cordless
Telephony (DECT) wireless local loop system in 28 cities in January 1998.
Moreover, OPI may also face significant potential competition from other
communications technologies that are being or may be developed or perfected in
the future. See "Business -- Competition."
RISKS INHERENT IN FOREIGN INVESTMENT
The Company has invested substantially all of its resources outside of the
United States and intends to continue to review possible international
investments in the future. Risks inherent in foreign operations include loss of
revenue, property and equipment from expropriation, nationalization, war,
insurrection, terrorism and other political risks, risks of increases in taxes
and governmental royalties and fees and involuntary renegotiation of contracts
with foreign governments. Only a portion of such risks may be insured. The
Company currently does not have political risk insurance in Italy. The Company
is also exposed to risks of change in foreign and domestic laws and policies
that govern operations of foreign-based companies.
There can be no assurance that the laws or administrative practice relating
to taxation, foreign exchange or other matters in Italy will not change, and any
such change could have a material adverse effect on the financial affairs of OPI
or the Company. The value of the Company's interest in OPI may also be affected
by changes in tax and other laws and other political, economic, socioeconomic or
diplomatic developments in or affecting Italy.
CURRENCY RISKS
Exchange rates for the lira may fluctuate in relation to the U.S. dollar,
and such fluctuations may have an adverse effect on the Company's earnings or
assets when translating lire into U.S. dollars. Any weakening in the value of
the lira against the U.S. dollar could result in lower revenues and earnings for
the Company when translated into U.S. dollars. In addition, as the Company's
primary financing will be in U.S. dollars and EUROs and the Company's
commitments to Omnitel and OPI are in lire, a currency exchange rate risk
exists. While the Company may consider entering into transactions to hedge the
risk of exchange rate fluctuations, there can be no assurance that the Company
will engage in such transactions, or, if the Company decides to engage in such
transactions, that they will be successful and that shifts in the currency
exchange
12
<PAGE> 19
rates will not have a material adverse effect on the Company. See "The ECU and
the EURO" and "Exchange Rates."
Omnitel and OPI will receive all of their revenues in Italian lire.
Currently there are no foreign exchange controls in Italy. Thus, although no
such payments have been made to date, the current foreign exchange rules would
allow Omnitel and OPI to export cash, representing dividends, interest or
repayment of loans. There can be no assurance that foreign exchange restrictions
will not be introduced or strengthened in the future.
REGULATION
Wireless communications operations are subject to governmental regulation,
including, among others, price controls and service requirements, which may
change from time to time, including due to changes in the political structure or
government representatives. There can be no assurance that material and adverse
changes in the regulation of the Company's existing operating systems will not
occur in the future.
The licensing, construction, ownership and operation of cellular telephone
systems, and the grant, maintenance and renewal of cellular telephone licenses
and radio frequency allocations in Italy are government regulated, principally
by the Ministry of Communications ("MOC") -- formerly the Ministry of Posts and
Telecommunications. In addition, such matters and certain other aspects of
cellular telephone system operations, including rates charged to customers and
the resale of cellular telephone service, may be subject to regulation by the
Italian Ministry of the Treasury and by public utility agencies. Changes in the
regulation of OPI's activities, such as increased or decreased regulation
affecting prices, or the terms of interconnect arrangements with Telecom Italia,
could materially adversely affect OPI. See "Business -- Government Regulation."
CONSTRAINTS ON CHANNEL CAPACITY
OPI's License currently grants it the use of 16.4 MHz of bandwidth which
can support 41 channels. This bandwidth compares with 25 MHz available to a
similar cellular business in the United Kingdom. The less spectrum available to
a cellular operator, the greater the number of base station sites required to
create a specified traffic capacity. Each base station has substantial fixed
costs and will increase OPI's infrastructure costs in comparison to cellular
operations that have access to more of the spectrum. See "Business -- Network
Design, Construction and Performance."
CERTAIN TAX CONSIDERATIONS
The Company or its affiliates generally will be subject to tax in the
foreign jurisdictions in which they operate. In addition, such foreign
jurisdictions may impose withholding taxes on distributions (by way of interest,
dividends or otherwise) to the Company. For example, under applicable treaties
currently in effect, interest from Italy to a United States person would be
subject to a maximum withholding tax of 15 percent, and dividends distributed by
an Italian company to a United States person would be subject to the following:
(i) a withholding tax of 5%, if paid to a United States company which has owned
more than 50% of the voting stock of the company paying the dividends for a
12-month period ending on the date the dividend is declared, (ii) a withholding
tax of 10%, if paid to a United States company which has owned 10% or more of
the voting stock of the company paying the dividends for a 12-month period
ending on the date the dividend is declared, provided that the beneficial owner
is not entitled to the benefit in (i) above; and (iii) a withholding tax of 15%
in all other cases. In general, the Company's ability to claim a foreign tax
credit against its U.S. federal income tax expense for foreign taxes is subject
to various limitations. These limitations and the inability of the Company to
offset losses in one foreign jurisdiction against income earned in another
foreign jurisdiction could result in a high effective tax rate on the Company's
earnings.
PASSIVE FOREIGN INVESTMENT COMPANY
Special U.S. tax rules apply to U.S. taxpayers that own stock in a passive
foreign investment company (a "PFIC"). In general, a non-U.S. corporation will
be treated as a PFIC if at least 75 percent of its income is "passive income" or
if at least 50 percent of its assets are held for the production of "passive
income." A non-
13
<PAGE> 20
U.S. corporation that owns 25 percent or more of the stock of a non-U.S.
subsidiary is treated as receiving a proportionate share of the income of, and
as owning a proportionate share of the assets of, such subsidiary.
It is possible that Omnitel is a PFIC. Generally, except to the extent the
Company makes an election to treat a PFIC in which it owns stock as a "qualified
electing fund" (a "QEF") in the first taxable year in which the Company owns the
PFIC's stock, (i) the Company would be required to allocate gain recognized upon
the disposition of stock in the PFIC and income recognized upon receiving
certain dividends ratably over the Company's holding period for the stock in the
PFIC, (ii) the amount allocated to each year other than the year of the
disposition or dividend payment would be taxable at the highest U.S. tax rate
applicable to corporations, and an interest charge for the deemed deferral
benefit would be imposed with respect to the tax attributable to each year, and
(iii) gain recognized upon disposition of PFIC shares would be taxable as
ordinary income. The Company acquired shares in Omnitel in 1990. The regular
deadline for making a QEF election for 1990 was in 1991. In December 1997, new
temporary regulations were issued by the Treasury Department, pursuant to which
the Company is seeking a ruling from the Internal Revenue Service that would
allow the Company to retroactively make the QEF election as described above. No
assurance can be given that the Internal Revenue Service will grant such ruling
request. If the Company cannot make the QEF election retroactively, on a sale of
its Omnitel shares or the receipt of certain dividends from Omnitel, the Company
would be subject to U.S. federal income tax and to an interest charge on that
tax over its holding period commencing in 1990, as described above.
If the Company were to make the QEF election, as described above, the
Company would be required in each year that the PFIC qualification tests are met
to include its pro rata share of the QEF's earnings as ordinary income and its
pro rata share of the QEF's net capital gain as long-term capital gain, whether
or not such amounts are actually distributed. The Company has not made any QEF
election with respect to Omnitel.
RADIO FREQUENCY EMISSION CONCERNS
Allegations have been made and a number of lawsuits have asserted that
serious health risks, including increased incidence of brain cancer and
interference with operation of pacemakers, have resulted from the use of
portable mobile communications devices. The actual or perceived risks of mobile
communications devices could adversely affect the Company through a reduced
subscriber growth rate or a reduction in subscribers, reduced network usage per
subscriber, the threat of product liability lawsuits, or through reduced
financing available to the mobile communications industry. The Company is not
insured to mitigate these potential risks.
RISK OF BEING DEEMED AN INVESTMENT COMPANY
The Company believes that it is not, and after giving effect to the
Offerings and the application of proceeds therefrom will not be, an investment
company as defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act"). The Company intends to continue its business and
conduct its operations so as not to become regulated by the Investment Company
Act. If the Commission or its staff were to take the position that the Company
was an investment company, the Company could be required either (a) to change
the manner in which it conducts its operations to avoid being required to
register as an investment company or (b) to register as an investment company,
either of which could have a material adverse effect on the Company.
LACK OF MARKETABILITY
The New Notes are being offered only to the Holders of the Old Notes. The
Old Notes were issued on March 18, 1998 to institutional investors and are
eligible for trading on the Luxembourg Stock Exchange. To the extent that the
Old Notes are tendered and accepted in the Exchange Offer, the trading market
for the remaining untendered Old Notes could be adversely affected. The Company
expects the New Notes to be listed on the Luxembourg Stock Exchange.
There is no existing market for the New Notes, and there can be no
assurance regarding the future development of a market for the New Notes, or the
ability of the Holders of the New Notes, or the price at
14
<PAGE> 21
which such holders may be able, to sell their New Notes. If such a market were
to develop, the New Notes could trade at prices that may be higher or lower than
the initial offering price of the Old Notes. Prevailing market prices from time
to time will depend on many factors, including then existing interest rates,
operating results and cash flow of the Company and the market for similar
securities. The Initial Purchasers have advised the Company that they currently
intend to make a market in the New Notes. The Initial Purchasers are not
obligated to do so, however, and any market-making with respect to the New Notes
may be discontinued at any time without notice. Accordingly, even if a trading
market for the New Notes does develop, there can be no assurance as to the
liquidity of that market.
ORIGINAL ISSUE DISCOUNT CONSEQUENCES
The Old Notes were issued at a substantial discount from their principal
amount. Consequently, Holders of the New Notes generally will be required to
include amounts in gross income for U.S. federal income tax purposes in advance
of receipt of the cash to which the income is attributable. See "Certain United
States Federal Income Tax Considerations" for a more detailed discussion of the
U.S. federal income tax consequences to the Holders of the New Notes of the
purchase, ownership and disposition of the New Notes.
If a bankruptcy case is commenced by or against the Company under the
United States Bankruptcy Code (the "Bankruptcy Code") after the issuance of the
New Notes, the claim of a Holder of New Notes with respect to the principal
amount thereof may be limited to an amount equal to the sum of (i) the initial
offering price of the Old Notes and (ii) that portion of the original issue
discount that is not deemed to constitute "unmatured interest" for purposes of
the Bankruptcy Code. Any original issue discount that was not amortized as of
any such bankruptcy filing would most likely constitute "unmatured interest."
15
<PAGE> 22
CONCURRENT OFFERING
Concurrently with the consummation of the sale of the Old Notes, the
Company issued and sold in the Concurrent Offering $86.25 million aggregate
principal amount of its 6% Convertible Subordinated Notes Due 2005 (the
"Convertible Notes") in a transaction exempt from, or not subject to, the
registration requirements of the Securities Act. The interest rate on and
conversion price of the Convertible Notes was determined by the prevailing
market and other conditions and, in the case of the conversion price, the market
price for the Company's common stock (the "Common Stock"). Cash interest on the
Convertible Notes shall be paid on October 1 and April 1 of each year commencing
October 1, 1998. The Convertible Notes will mature on April 1, 2005 and will be
convertible at the option of the Holder thereof at any time following the date
of the original issuance thereof and prior to maturity, unless previously
redeemed, into shares of Common Stock of the Company. The conversion price is
subject to adjustment in certain events. The Convertible Notes are redeemable,
in whole or in part, at the option of the Company, at any time after the third
anniversary of their issuance, at redemption prices to be determined at the time
of sale. Upon a Change of Control, holders of the Convertible Notes will have
the right to require the Company to purchase all or any part of the Convertible
Notes at a purchase price equal to 101% of the principal amount thereof and any
accrued and unpaid interest to the date of purchase. The indenture governing the
Convertible Notes contains customary restrictions with respect to the incurrence
of indebtedness, restricted payments, mergers and consolidations and the sale of
all or substantially all of the assets of the Company.
The Convertible Notes are unsecured obligations of the Company,
subordinated in right of payment to all existing and future Senior Debt (as
defined) of the Company including, without limitation, the New Notes and the
Original Notes (if any remain outstanding after the Tender Offer).
USE OF PROCEEDS
The Company will not receive any proceeds from the issuance of the New
Notes offered pursuant to the Exchange Offer. In consideration for issuing the
New Notes as contemplated in this Prospectus, the Company will receive in
exchange Old Notes in like principal amount, the terms of which are identical in
all material respects to the New Notes except (i) that the New Notes have been
registered under the Securities Act, (ii) for certain transfer restrictions and
registration rights relating to the Old Notes and (iii) that the New Notes will
not contain certain provisions relating to Liquidated Damages to be paid to
Holders of Old Notes under certain circumstances relating to the timing of the
Exchange Offer. The Old Notes surrendered in exchange for New Notes will be
retired and cancelled and cannot be reissued. Accordingly, issuance of the New
Notes will not result in any increase in the indebtedness of the Company.
The net proceeds received by the Company from the sale of the Old Notes and
the Convertible Notes, after deducting the underwriting discounts and
commissions and expenses of the offering of the Old Notes and the Convertible
Notes, were approximately $239.3 million, of which $202.0 million was used to
repay borrowings under the Original Notes.
16
<PAGE> 23
THE ECU AND THE EURO
Under Article 109g of the Treaty, the currency composition of the ECU may
not be changed. The Treaty contemplates that European economic and monetary
union will occur in three stages, the second of which began on January 1, 1994
with the entry into force of the Treaty on European Union. The Treaty provides
that the third stage of European economic and monetary union will start on
January 1, 1999 and on that date the value of the ECU as against the currencies
of the member states participating in the third stage will be irrevocably fixed
and the ECU will become a currency in its own right. On June 17, 1997, the
Council of the European Union adopted Council Regulation (EC) No. 1103/97, which
recites that the name of that currency will be the EURO and that, in accordance
with the Treaty, substitution of the EURO for the ECU will be at the rate of one
EURO for one ECU. From the start of the third stage of European economic and
monetary union, all payments in respect of the New Notes will be payable in
EUROs at the rate of one EURO for one ECU.
The ECU is a composite currency, consisting of specified amounts of
currencies of twelve European Union member states. The ECU basket is comprised
of specified amounts of the German mark, the British pound, the French franc,
the Italian lira, the Dutch guilder, the Belgian franc, the Luxembourg franc,
the Danish krone, the Irish punt, the Greek drachma, the Spanish peseta and the
Portuguese escudo. Changes in exchange rates of the currencies of the member
states of the European communities, including revaluations and devaluations, do
not effect the fixed composition of the ECU; however, the exchange rate of the
ECU in subsequent trading may change because of the increased or reduced
exchange rates of its components.
EXCHANGE RATES
Both Omnitel and OPI publish their financial statements in lire. The
following table sets forth, for the periods indicated, certain information
regarding the Noon Buying Rate for lire, expressed in lire per U.S. dollar.
<TABLE>
<CAPTION>
CALENDAR PERIOD HIGH LOW AVERAGE(1) AT PERIOD END
--------------- ----- ----- ---------- -------------
<S> <C> <C> <C> <C>
1993............................................... 1,726 1,451 1,587 1,718
1994............................................... 1,707 1,511 1,605 1,622
1995............................................... 1,736 1,569 1,629 1,584
1996............................................... 1,602 1,496 1,538 1,519
1997............................................... 1,838 1,517 1,700 1,768
1998 (through May 12, 1998)........................ 1,828 1,740 1,788 1,749
</TABLE>
- ---------------
(1) Average of the rates for the last business day of each month in the period.
The following table sets forth, for the periods and dates indicated,
certain information concerning the ECU exchange rate, set forth in U.S. dollars
per ECU.
<TABLE>
<CAPTION>
CALENDAR PERIOD HIGH LOW AVERAGE(1) AT PERIOD END
--------------- ------ ------ ---------- -------------
<S> <C> <C> <C> <C>
1993............................................. 1.2467 1.0910 1.1695 1.1125
1994............................................. 1.2777 1.1040 1.1862 1.2266
1995............................................. 1.3456 1.2190 1.2941 1.2795
1996............................................. 1.2849 1.2258 1.2520 1.2545
1997............................................. 1.2529 1.0504 1.1300 1.0980
1998 (through May 12, 1998)...................... 1.1165 1.0725 1.0788 1.1095
</TABLE>
- ---------------
(1) Average of the rates for the last business day of each month in the period.
To the extent the Company obtains financing in U.S. dollars or EUROs and
the Company's future commitments to Omnitel are in Italian lire, it will
encounter currency exchange risks. Omnitel's revenues will be received in
Italian lire. Any devaluation of the lire against the dollar or the EURO may
have an adverse effect upon the Company, which may be material.
17
<PAGE> 24
Prior to September 1992, the Bank of Italy maintained the value of the lira
within the narrow band contemplated by the Exchange Rate Mechanism ("ERM") of
the European Monetary System ("EMS"). On September 17, 1992, however, in
response to strong downward pressure on the lira against other EMS currencies
that continued despite central bank intervention, the Italian Government, in
consultation with the Bank of Italy, suspended the lira from the ERM. Following
this suspension, the value of the lira immediately declined by approximately 20%
against the main EMS currencies. On November 24, 1996, the lira was readmitted
to the ERM at a rate of 990 lire per Deutsche Mark as agreed among the Bank of
Italy and the central banks of the other nations participating in the EMS. The
Italian Government has stated publicly that Italy intends to enter the single
European currency in 1999 and has initiated a series of measures to help Italy
meet the criteria for entry.
18
<PAGE> 25
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company as of December 31, 1997, and as adjusted to reflect the offering of the
Convertible Notes and the Old Notes by the Company and the application of the
net proceeds therefrom as if it occurred on such date. See "Use of Proceeds."
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
------------------------
ACTUAL AS ADJUSTED
(IN THOUSANDS)
<S> <C> <C>
Cash, cash equivalents and marketable securities............ $ 84,127 $ 120,348
========= =========
Long term debt:
13 1/4% Senior Discount Notes due 2000...................... $ 197,327 $ 34,371
9 1/2% Senior Discount Notes due 2005 (denominated in
EUROs)(1)................................................. -- 161,153
6% Convertible Subordinated Notes due 2005.................. -- 86,250
--------- ---------
Total debt(2)..................................... 197,327 281,774
Shareholders' (deficiency):
Series preferred stock -- $0.01 par value; authorized
2,500,000 shares; outstanding none.................... -- --
Common stock -- $0.01 par value; authorized 25,000,000
shares; issued and outstanding 16,359,000 shares(3)... 164 164
Additional paid-in capital............................. 29,821 29,821
(Deficit).............................................. (88,754) (132,486)
--------- ---------
Total shareholders' (deficiency).................. (58,769) (102,501)
--------- ---------
Total capitalization........................................ $ 138,558 $ 179,273
========= =========
</TABLE>
- ------------------------------
(1) EURO denominated Notes converted into dollars at the December 31, 1997
conversion rate of 1.0980.
(2) OPI is required to provide an approximate 219 billion lire ($120.5 million)
performance bond that requires payments to the Italian government if OPI
fails to meet certain operational targets. The Company's maximum liability
under the performance bond is approximately 22.5 billion lire ($12.4
million). See "Risk Factors -- Holding Company Structure; Minority
Interests; Limitations on Access to Cash Flow."
(3) After giving retroactive effect to the 3-for-2 stock split by way of stock
dividend paid on April 14, 1998. Outstanding shares do not include an
aggregate of 3,072,000 shares of the Company's Common Stock issuable upon
exercise of options and warrants or approximately 2,159,000 shares of Common
Stock issuable upon conversion of the Convertible Notes.
Except as disclosed herein, there has been no material change in the
capitalization of the Company and its subsidiaries since December 31, 1997.
19
<PAGE> 26
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial information presented below under the
captions Statement of Operations Data for the years ended December 31, 1997,
1996, 1995, 1994 and 1993 and Balance Sheet Data as of December 31, 1997, 1996,
1995, 1994 and 1993 were derived from the Consolidated Financial Statements of
the Company incorporated herein by reference which have been audited by Ernst &
Young LLP. The following information should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements and notes thereto in the
Company's 10-K for the year ended December 31, 1997, incorporated herein by
reference.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31,
------------------------------------------------------
1997 1996 1995(1) 1994 1993
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Equity in net loss of Omnitel......... $ 5,521 $ 29,850 $ 14,636 $ 2,421 $ --
General and administrative expenses... 2,997 3,397 3,805 3,394 1,157
Write-off of investments in joint
venture............................. -- -- 602 481 83
Write-off of deferred costs........... -- -- 1,167 376 --
Depreciation expense.................. 15 25 28 9 5
Amortization of investments in joint
ventures............................ 691 691 537 96 --
-------- -------- -------- ------- -------
Operating loss........................ (9,224) (33,963) (20,775) (6,777) (1,245)
Other income (expense):
Interest income and other, net...... 4,500 5,125 1,963 211 370
Interest expense.................... (26,625) (23,330) (7,230) (1,848) --
Cellular Communications, Inc. fees
in connection with the bank
loan............................. -- -- (101) (95) --
Gain on sale of investment in joint
venture.......................... -- -- 38,901 -- --
-------- -------- -------- ------- -------
Income (loss) before income taxes and
extraordinary item.................. (31,349) (52,168) 12,758 (8,509) (875)
Income tax benefit (provision)........ -- 1,200 (5,943) -- --
-------- -------- -------- ------- -------
Income (loss) before extraordinary
item................................ (31,349) (50,968) 6,815 (8,509) (875)
Loss from early extinguishment of
debt, net of income tax benefit of
$794,000............................ -- -- (1,474) -- --
-------- -------- -------- ------- -------
Net income (loss)..................... $(31,349) $(50,968) $ 5,341 $(8,509) $ (875)
======== ======== ======== ======= =======
Income (loss) before extraordinary
item per common share:(2)
Basic............................... (1.94) (3.23) .45 (.56) (.06)
Diluted............................. (1.94) (3.23) .38 (.56) (.06)
Net income (loss) per common share:(2)
Basic............................... (1.94) (3.23) .35 (.56) (.06)
Diluted............................. (1.94) (3.23) .30 (.56) (.06)
Denominator for income (loss) per
share calculation:
Basic............................... 16,177 15,764 15,346 15,141 14,984
Diluted............................. 16,177 15,764 17,713 15,141 14,984
OTHER DATA:
Ratio of earnings to fixed
charges(2).......................... -- -- 1.6:1 -- --
</TABLE>
20
<PAGE> 27
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------------------------------------------
1997 1996 1995(4) 1994 1993
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital (deficiency)......... $ 81,992 $ 79,392 $ 75,840 $(24,575) $11,417
Investment in joint ventures......... 52,151 58,363 44,726 28,856 1,081
Total assets......................... 140,714 146,307 175,290 38,301 13,545
Bank loan payable.................... -- -- -- 29,980 --
Long-term debt....................... 197,327 172,052 149,869 -- --
Shareholders' equity (deficiency).... (58,769) (28,561) 21,167 6,774 13,148
</TABLE>
- ------------------------------
(1) 1995 includes a gain on sale of investment in joint venture of $25,286,000,
net of tax of $13,615,000 ($1.43 per common share) and a charge of
$1,474,000, net of income tax benefit of $794,000, from early extinguishment
of debt (($0.08) per common share).
(2) After giving retroactive effect to the 3-for-2 stock split by way of a stock
dividend, which was paid on May 13, 1994 and the 3-for-2 stock split by way
of stock dividend paid on April 14, 1998.
(3) Fixed charges consist of interest expense, including capitalized interest,
and amortization of fees related to debt financing. The fixed charges
coverage deficiency amounted to $31.3 million, $52.2 million, $10.5 million
and $0.9 million for the years ended December 31, 1997, 1996, 1994, and
1993, respectively.
(4) In 1995, the Company issued $281,571,000 aggregate principal amount of 13
1/4% Senior Discount Notes due 2000 at a price to the public of 52.783% or
$148,622,000.
The Company did not declare or pay any cash dividends during the years
indicated.
21
<PAGE> 28
BUSINESS
GENERAL
The Company was incorporated in Delaware in 1984 to own and operate
cellular telephone systems in various markets. Beginning in 1988, the Company
entered into joint ventures to pursue opportunities in wireless communications
businesses outside of the United States. The Company currently holds a 14.667%
interest in Omnitel, a strategic joint venture which holds a 70% interest in and
directs the management of OPI, a joint venture which has been awarded one of two
national cellular telephone licenses for Italy using the GSM technology, the
digital technology for cellular telephone systems that all European Union
countries have agreed to adopt as a common standard. The Company through its
14.667% interest in Omnitel, holds an approximate 10.267% interest in OPI.
In March 1994, the Italian Government announced that OPI was selected by
the Italian Government as the licensee of Italy's second GSM cellular telephone
license (the "License"). The other joint venturers in Omnitel are OliMan Holding
B.V. ("OliMan"), a joint venture currently owned 75% by Ing. C. Olivetti & C.,
S.p.A. ("Olivetti") and 25% by Mannesmann A.G., Bell Atlantic International,
Inc. ("Bell Atlantic") and Telia International AB ("Telia") (collectively, the
"Omnitel Corporate Partners"). Pronto Italia, which holds a 30% interest in OPI,
consists of AirTouch, Mannesmann and several smaller partners (together with the
Omnitel Corporate Partners, the "Corporate Partners"). To date, several of the
Corporate Partners have separately participated in the design, construction and
operation of GSM cellular networks in over 10 countries and have built GSM
networks which now serve several million subscribers. At present, neither
Omnitel nor OPI is an Affiliate (as defined) of the Company.
The Company believes that OPI's launch as Italy's second mobile
telecommunications operator has been one of the most successful in wireless
history. Since the start-up of its GSM system in December 1995, OPI has not only
achieved comparable coverage with its much larger and longer established
competitor, but has attracted over 2.5 million subscribers. As of December 31,
1997, management believes that OPI had approximately 30% of the GSM market and
21% of the total cellular market in Italy, with its cellular network covering
over 95% of the Italian population. In the quarter ending June 30, 1997, OPI
generated positive EBITDA for the first time.
The Company continues to review telecommunications opportunities in Europe
from time to time.
OMNITEL AND OPI
GENERAL. In February 1994, Omnitel and Pronto Italia entered into an
agreement to jointly form OPI as their combined applicant for the second GSM
license in Italy. The License is for a period of 15 years, ending January 2010.
OPI and TIM are currently the only licensed GSM cellular network operators in
Italy. A third mobile communications license will reportedly be awarded by May
1998, although it has not yet been decided whether the license will be
exclusively DCS-1800 or whether it may include some GSM-900 spectrum.
OPI has entered into a license agreement with the MOC which defines the
rights and obligations of OPI relating to the License. The License grants OPI
access to 10.8 MHz, corresponding to 27 two-way 200 KHz radio channels, and
authorizes OPI to provide digital cellular telephone service as well as other
related value added services, such as voice mail, weather and sports reports.
OPI subsequently received 14 more two-way 200 KHz channels (5.6 MHz of
spectrum). Pursuant to the License, OPI was required to activate cellular
telephone service to cover at least 40% of Italian territory and all Italian
regional capitals within 18 months of the License grant, and 70% of Italian
territory and 90% of the Italian population within five years of the License
grant. The License also sets forth service quality standards, such as requiring
that OPI's failure rate for attempted calls over its network be 5% or less, that
OPI route its international traffic through the switching centers of the Italian
PSTN (prior to January 1, 1998) and that OPI pay established fees for local and
international wireline service.
OPI paid a fee of 750 billion lire (approximately $412.8 million) to the
Italian government following the grant of the License, although in response to
EU pressure to encourage a fair and competitive communications
22
<PAGE> 29
market, OPI has since received 60 billion lire from TIM. See
"Business -- Government Regulation -- European Union Telecommunications Law."
Throughout the term of the License, OPI is required to pay a royalty fee to the
Italian government equal to 3.5% of OPI's annual sales, net of amounts paid to
public wireline telephone operators for their services. OPI agreed to pay
royalties to the MOC in amounts that are not less than 1.7 billion lire for 1995
($0.9 million); 8.2 billion lire for 1996 ($4.5 million); 25.4 billion lire for
1997 ($14.0 million); 51 billion lire for 1998 ($28.1 million) and 77.1 billion
lire for 1999 ($42.4 million), subject in each year to reduction only due to any
proportionate reduction of the royalty percentage to less than 3.5%, and has
made such payments for 1995 and 1996.
As a result of the License award, the Company has made capital
contributions of 152.5 billion lire (an aggregate of $96.8 million at the
exchange rates in effect at the time of each contribution) to Omnitel in order
to fund the Company's 10.267% share of the capital requirements of OPI. It is
expected that no further capital contributions will be required under the
currently approved business plan, except for the subordinated credit facility of
70 billion lire that the Omnitel board of directors agreed to make available to
OPI under certain circumstances.
MARKET OVERVIEW. Italy is the largest and fastest growing cellular market
in Europe with 11.7 million subscribers at year end 1997. The number of Italian
cellular subscribers has grown rapidly since a predecessor to TIM commenced full
900 MHz analog cellular service in 1990. TIM commenced limited operation of a
GSM system late in 1992 and launched full marketing of its GSM system in April
1995, with OPI following in December 1995.
The growth in demand for cellular telecommunications, spurred by declining
cellular telephone equipment and service prices, an increased awareness of the
benefits of cellular communications, distribution through widespread channels
and expanded network coverage and capacity, has been accompanied by transition
to digital systems and development of advanced wireless communications
technologies. Complementing such technological developments, the Italian
telecommunications market has undergone a process of deregulation and
liberalization and has become an increasingly competitive market. OPI has
capitalized on this rapid growth and developed and executed a business plan that
resulted in one of the most rapid wireless start-ups in history. In developing
its market plan, OPI viewed then-current market conditions in Italy as
characterized by mediocre calling quality, relatively high access costs and poor
customer service. OPI's business plan successfully addressed these major
weaknesses.
The Company believes Italy represents an attractive environment for the
provision of wireless communications services due to the following factors:
- Italy's population of 58 million, concentrated in over 13 metropolitan
areas, is the fourth largest in Europe;
- Italy has the third largest economy in Europe in terms of GDP, behind
only Germany and France, while ahead of the U.K.;
- Italy's favorable demographic characteristics which include a per capita
income of over $18,000;
- The Italian economy is characterized by large numbers of small and medium
size businesses which, in the United States, have been heavy users of
cellular services;
- Cellular service currently being provided in Italy has been rapidly
accepted by both business and residential customers; and
- Favorable EU and Italian regulations and oversight resulting from the EU
mandate to encourage a fair and competitive telecommunications market.
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The Company believes OPI is well-positioned versus TIM in providing
wireless communications services due to the following factors:
- The Corporate Partners' experience in the management of cellular systems;
- The quality of OPI's network, which has been designed for handheld
telephone coverage; and
- OPI's business strategy, a core part of which is to provide superior
levels of customer service.
ITALIAN TELECOMMUNICATIONS INDUSTRY
OVERVIEW. Until recent years, most telecommunications services in Italy
were provided by the previously government-owned Telecom Italia and its
predecessors. Telecom Italia, privatized in October 1997, continues to be the
dominant provider of fixed telephony services in Italy. TIM, approximately 60%
owned by Telecom Italia, manages and operates the cellular phone service as well
as the paging and public radio mobile communications formerly operated by
Telecom Italia.
ITALIAN CELLULAR TELEPHONE INDUSTRY. The cellular telephone industry in
Italy initially developed at a slower pace than other European cellular markets.
However, Italy was the fastest growing market in Europe in 1997 and mobile
telephone penetration in Italy has now surpassed the European average, having
exceeded the penetration levels in the United Kingdom, France and Germany. As of
December 31, 1997, the Italian penetration rate for cellular telephones was
approximately 20.6%, with approximately 11.7 million subscribers. Of these
subscribers, approximately 3.4 million used analog-based cellular phones and
approximately 8.3 million used GSM phones. The sole cellular operator in Italy
for five years prior to OPI entry into the market in December 1995 was TIM. OPI
launched commercial services in December 1995. As of December 31, 1997, OPI had
approximately 2.5 million subscribers, representing 21% of the total cellular
market. Italy again added the most cellular subscribers in Europe in 1997.
The following table indicates the growth in the number of analog and GSM
cellular subscribers in Italy from 1992 to 1997.
<TABLE>
<CAPTION>
TIM OPI
--------------------------- --------- TOTAL
YEAR ENDED DECEMBER 31, ANALOG (EST.) GSM (EST.) GSM ----------
<S> <C> <C> <C> <C>
1992..................................... 780,800 0 0 780,800
1993..................................... 1,200,800 6,200 0 1,207,000
1994..................................... 2,164,400 75,300 0 2,239,700
1995..................................... 3,396,000 467,000 54,000 3,917,000
1996..................................... 3,795,300 1,910,000 713,000 6,418,300
1997..................................... 3,400,000 5,800,000 2,460,000 11,660,000
</TABLE>
LOCAL TELEPHONE SERVICE. Telecom Italia is currently the dominant provider
of local telephone service in Italy. Local telephone service provides the
subscriber with a base dial tone and interconnections between local and long
distance service.
BUSINESS STRATEGY
OPI's principal objective is to continue to capitalize on the opportunities
it believes are available in the growing and evolving cellular market in Italy.
To establish itself as a leading provider of high quality cellular services in
Italy, OPI is pursuing the following business strategy:
OFFER SERVICES TAILORED TO SPECIFIC MARKETS. OPI offers services tailored
to the specific needs of several segments in the voice services market,
including personal users, small and medium-sized businesses, and large
corporations. The products offered to each segment contain various options,
services and prices that are designed to meet the specific needs identified
within each segment. By more effectively tailoring the package of services
offered to customers' actual needs, OPI believes that customers perceive a
higher value being delivered in relation to the cost, are more inclined to use
cellular services and have higher levels of product satisfaction.
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CONSTRUCT A HIGH CAPACITY, FLEXIBLE NETWORK. By building a high capacity,
technologically advanced cellular network, OPI commenced operations with an
infrastructure that was capable of handling rapid growth in activations and
could readily accommodate the implementation of new voice and data products as
they were developed. In designing the network, OPI utilized its Corporate
Partners' significant experience in designing and building cellular networks to
construct a network that can provide efficient and dependable service with a
minimum of interruptions. The OPI network was built to take advantage of current
digital technology and to provide high quality service. Compared to analog
systems, GSM systems provide users with improved sound quality and enhanced
security features, as well as pan-European roaming.
BUILD CUSTOMER LOYALTY THROUGH SUPERIOR CUSTOMER SERVICE. OPI offers
subscribers access to 24-hour, seven days a week customer service providing
information regarding territorial coverage, distribution channels, product
features and technical troubleshooting. By employing the "best practices" used
by OPI's Corporate Partners in their businesses, OPI has raised the quality of
customer service offered to the highest levels found elsewhere in Europe and the
United States and has differentiated itself from the competition and generated a
high degree of customer loyalty.
INTEGRATION OF TELECOMMUNICATIONS SERVICES. OPI's business plan
anticipates the gradual integration in Italy of the wireless and wireline
telecommunications markets. OPI has introduced new pricing plans for its GSM
service that provide competitive rates with those provided by TIM. In addition,
OPI anticipates that this convergence will also result in some integration of
the wireless and wireline telecommunications networks that provide services to
customers.
SERVICES OFFERED BY OPI
VOICE SERVICES. OPI offers various tariff plans and service packages
targeting individual market segments and tailored to address different usage
patterns. Each package includes certain standard functions and offers a variety
of optional services. In addition, OPI may offer installment payment plans for
purchasing cellular telephones for business customers. OPI is continually
developing a wider range of value added service features, which management
believes will stimulate subscriber usage and provide additional sources of
revenue. Services currently offered to subscribers include international
roaming, voice mail, call waiting, call on hold, call forwarding, and short
messaging services.
Subscribers are charged, depending upon the plan, a one-time connection
fee, a monthly basic charge and traffic fees per minute. The rates OPI may
charge for cellular services are not subject to government tariffs establishing
minimum or maximum prices.
In October 1997, OPI introduced "Rete Aziendale Mobile" (RAM), a virtual
private network service using its intelligent network platform, allowing it to
offer corporate users special low rates for calls within predefined closed user
groups, as well as quick four digit dialing within these groups (as on a PBX).
TELEPHONE EQUIPMENT AND TERMINALS. OPI and its distribution channels offer
customers GSM cellular telephones with a broad range of optional features.
Business customers may purchase GSM telephones through OPI on an installment
plan.
MARKETING STRATEGY
OPI's marketing strategies are designed to build upon its competitive
strengths in order to increase OPI's market share and revenues by expanding its
subscriber base, maximizing usage and revenue per subscriber and minimizing
churn. OPI's marketing objective continues to be to create demand for cellular
voice and data transmission services and to attract subscribers by targeting the
needs of various market segments and providing superior service and reliability,
rather than competing principally on the basis of price. OPI generates demand
through innovative pricing and features, distribution, advertising and marketing
of cellular telephone service and by introducing significant improvements in the
quality of customer service and the cellular telephone network.
DISTRIBUTION. OPI's objective is to maintain a cost-effective distribution
network that maximizes its ability to distribute products and services to each
of the voice and data market segments it has identified.
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OPI uses both indirect channels (such as existing third-party sales or
distributorship organizations) and direct channels (such as large account direct
sales teams, proprietary stores under franchising agreements and cellular
"promoters" who are independent agents affiliated with OPI).
OPI has arrangements with over 2,000 independent dealers who target both
small businesses and the personal market segment. OPI's large accounts teams
target the top companies in Italy and contact the potential high usage customers
within these organizations. OPI's cellular promoters target small to medium-
sized businesses and, in certain circumstances, larger organizations. Cellular
promoters include individuals and organizations that are already active in
marketing business communications products. Finally, OPI's network of 42
franchised stores serves both business and retail/consumer markets.
ADVERTISING. OPI uses a combination of direct marketing, trade advertising
and retail advertising, along with promotional campaigns aimed at OPI's
distributors, to promote OPI's services. OPI advertises in newspapers and
periodicals as well as on television and maintains retail points of presence in
important shopping areas and in airports. Through its advertising efforts, OPI
seeks to promote a recognizable image of OPI's services with consumers,
emphasizing OPI's proximity to the customer in every aspect of the services
provided and demonstrating the opportunities and advantages that GSM cellular
service can offer in both their business and personal lives.
CUSTOMER SERVICE
The Company believes that superior customer service is vital to achieving
its objective of becoming a leading cellular telephone and data transmission
service provider in Italy. OPI attracts and retains customers by providing a
high level of service in the key areas of customer assistance and maintenance,
billing and fraud prevention. OPI's customer service operations utilize state of
the art technology and are operated by well trained staff. OPI continually
expands the capacity of its customer service operations to keep pace with
subscriber growth.
CUSTOMER ASSISTANCE AND MAINTENANCE. OPI provides a full range of customer
services from the point of sale onward, including customer inquiry helplines,
regional service centers and on-line assistance to customers with respect to
billing and technical difficulties, service inquiries, the use and repair of
equipment and other aspects of OPI's network operations. OPI provides its
customers with a universal number to permit dialing from any location in Italy
to call a customer service center that provides 24-hour service. This provides
customers with quick, "one-stop" service and a single contact point for help in
solving their cellular telephone and data transmission problems.
BILLING. OPI provides its subscription customers with easy to read bills
that are sent out bi-monthly. For customers who require detailed bills, OPI
offers several billing options.
PREPAID SERVICES. The majority of OPI's subscribers do not receive bills
because they are prepaid subscribers. These subscribers purchase "airtime" in
advance in the form of cards with unique codes. These codes, when input into
OPI's customer friendly user-interface, increase a subscriber's balance, which
is then continuously displayed on the telephone's LCD screen. In 1997, OPI
introduced the first rechargeable GSM card that can be used to make
international calls from Italy and can be used abroad.
CELLULAR TELEPHONE TECHNOLOGY
GSM AND DCS-1800. GSM is a digital technology for cellular telephone
systems that all European Union ("EU") countries (and many countries outside the
EU) have agreed to adopt as a common standard. Commercial launch in several
European countries commenced in 1992 and by the end of 1997 there were
approximately 41.2 million GSM (900 MHz) subscribers in Western Europe, an
increase of 100% over 20.6 million subscribers at the end of 1996. Because of
the popularity of the GSM standard and the recent rapid growth in GSM
subscribers, the Company believes that GSM telephones will continue to decline
rapidly in price. The GSM system is designed to allow subscribers to use their
cellular telephones and automatically receive calls throughout Europe and, in
theory, wherever GSM technology has been adopted. Over 100 countries, including
virtually all countries in Western Europe, have issued or propose to issue GSM
licenses.
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The GSM standard has also been adapted to the 1,800 MHz range and many European
countries have issued or will issue one or more of these so-called "DCS-1800"
licenses. DCS-1800, because of its technical characteristics, is better suited
for an urban setting.
Because of the digital nature of the technology, GSM technology offers
significantly increased capacity, better voice quality and improved privacy than
existing analog systems. In addition, GSM data is contained on a subscriber
identity module card ("SIM Card" or "Smart Card") which can be transferred from
one cellular telephone to another. This feature greatly increases the
possibilities for distributing GSM services by eliminating the need for all
distribution points to stock telephones. GSM also provides for such advanced
value-added features as short messaging service (which provides an alphanumeric
display of short messages), caller ID (which displays the calling number) and
other data services. An example of the innovative usage of these features to
increase penetration has been OPI's use of the short messaging service to
provide its prepaid subscribers with a real time account balance.
GSM has also been designed to offer various technical solutions to prevent
fraud and misuse, such as authentication, together with anonymity and encryption
(the transformation of information from a readily recognizable system of coding
to an encoded or enciphered system of coding, or vice versa) of the signal so
that conversations cannot be easily intercepted.
OPERATING CHARACTERISTICS. The cellular telephone industry is typically
characterized by high fixed costs and low variable costs. Until technological
limitations on total capacity are approached, additional cellular telephone
system capacity can normally be added in increments that closely match demand
and at less than the proportionate cost of the initial capacity. The industry
has also recently experienced decreasing equipment prices. The amount of profit,
if any, under such circumstances is dependent on, among other things, prices and
variable marketing costs, which in turn are affected by the amount and extent of
competition.
NETWORK DESIGN, CONSTRUCTION AND PERFORMANCE
Quality and geographic coverage of the network are key factors in the
distribution of cellular telephone service. OPI has constructed a high capacity,
technologically advanced cellular network. The irregular topography, including
many tunnels and mountains, near some of Italy's most important cities requires
OPI to implement special network designs to avoid interruptions of calls.
NETWORK DESIGN. The basic element of OPI's GSM network are its base
stations, the interface between the user's telephone and the network. The base
stations house radio transmission and reception equipment and performs signal
processing activities when interfacing with the signal. Each base station has
substantial fixed costs which include the cost of purchasing or leasing land,
constructing the facility, installing adequate power supply, installing adequate
security systems and constructing and maintaining the equipment, towers,
cabling, antennae or other related costs. As of December 31, 1997, approximately
2,400 base stations had been installed. OPI plans to install an additional 1,300
base stations in 1998.
Cellular traffic is collected from a number of base stations and routed to
a Base Station Controller ("BSC"). The BSCs allocate radio channels among base
stations, manage intra-BSC handoffs among the base stations and interface with
the 23 Mobile Switching Centers ("MSC"). OPI plans to install an additional 13
MSCs in 1998. The MSCs will provide the connection between OPI's GSM network and
Telecom Italia's fixed network. MSCs will be located near Telecom Italia's
switching centers to reduce the costs of accessing the PSTN. Interconnection of
the various elements of OPI's network has generally been accomplished using
lines leased from Telecom Italia. However, where appropriate and cost effective,
OPI intends to develop its own transmission capabilities or utilize third party
links.
In 1997, OPI installed an Intelligent Network Platform, which allows for
the rapid creation and implementation of advanced network features (such as
closed user group four digit dialing).
BASE STATION CONSTRUCTION. The process of obtaining appropriate sites
requires that OPI personnel coordinate, among other things, site-specific
requirements for engineering and design, leasing of the required space,
obtaining all necessary governmental permits, construction of the facility and
equipment installation.
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OPI has utilized software systems developed by its Corporate Partners to assess
the feasibility of new various sites so that network design and site development
are coordinated to the maximum extent possible.
COVERAGE AND PERFORMANCE OBJECTIVES. The network is designed to perform
with less than 2% of calls interrupted during peak periods, including less than
1% of interruptions in the connection between MSCs and the fixed network, and
with system availability of 99.94% during daytime hours. OPI selects appropriate
cell sites and alternative cell sites so as to reduce voice alteration and call
interruption resulting from signal attenuation or interference due to Italy's
irregular topography. These coverage and performance objectives, if attained,
will exceed the mandates contained in the License, which required coverage by
OPI of at least 40% of Italian territory and all regional capitals during 1996
and require coverage of 70% of Italian territory and 90% of the Italian
population by the fifth anniversary of the License grant.
OPI awarded Nokia Telecommunications ("Nokia") a contract for the initial
and secondary phases of construction of its GSM network.
ROAMING AGREEMENTS. Roaming allows OPI's customers to receive and make
international, local and long distance calls while traveling outside of Italy.
OPI has negotiated roaming agreements with over 70 operators in more than 50
countries, enabling subscribers to make and receive calls abroad.
PERFORMANCE BOND. OPI has provided an approximate 219 billion lire ($120.5
million) performance bond to the Italian government linked to OPI's meeting
certain performance goals relating to territory coverage, investment, employment
and payment of license fees. Specifically, OPI was required to (i) cover 50% of
Italian territory with its cellular network by May 1996 and 98% by May 1998,
(ii) invest 969 billion lire ($533.3 million) by May 1996 and 1,552 billion lire
($854.2 million) by May 1998, (iii) employ 1,163 people by May 1996 and 2,686
people by May 1998, (iv) pay royalties to the MOC in amounts that are not less
than 1.7 billion lire for 1995 ($0.9 million); 8.2 billion lire for 1996 ($4.5
million); 25.4 billion lire for 1997 ($14.0 million); 51 billion lire for 1998
($28.1 million) and 77.1 billion lire for 1999 ($42.4 million), subject in each
year to reduction only due to any proportionate reduction of the royalty
percentage to less than 3.5% and (v) maintain the declared stockholding majority
of OPI until February 1, 2000. OPI is subject to monetary penalties for failing
to achieve such goals. Performance goals have been achieved to date, and
although no assurance can be given, the Company believes the future performance
goals are achievable. The maximum liability of the Company under the performance
bond would be approximately 22.5 billion lire ($12.4 million), reflecting its
proportionate interest in OPI. In addition, the failure of OPI to meet the
standards of service (meaning proper use of frequencies, meeting coverage goals,
maintaining and interconnecting the networks, and prompt payment of license
fees) prescribed in the License and the performance bond could result in loss of
the License and have a material adverse effect on OPI and the Company. See "Risk
Factors -- Performance Bond Liability."
ARRANGEMENTS WITH TELECOM ITALIA
FEES AND PRICING WITH TELECOM ITALIA. Pursuant to the License, OPI
connects its mobile cellular telephone network to the PSTN. Although Telecom
Italia grants OPI discounts on two Mbps leased lines, OPI is negotiating costs
for 34 and 155 Mbps leased lines, which will further reduce OPI's
interconnection expense. Telecom Italia charges equivalent access fees and
provides equivalent access to and pricing of leased lines to each of OPI and
TIM. Following a reduction in 1997, OPI's access charges when interconnecting to
the PSTN (originally set at 200 lire per minute for all calls) are currently set
at 200 lire per minute for inbound calls and 80 lire per minute for outbound
calls.
OPI'S CORPORATE PARTNERS
The Corporate Partners are on the leading edge of cellular technology
worldwide. Certain Corporate Partners are involved in standardizing and revising
technological specifications of cellular systems in their respective markets and
also possess expertise in other international technological areas such as the
European Telecommunications Standards Institute, the Universal Mobile
Telecommunications System and the International Telecommunications Union. The
Corporate Partners include OliMan (75% owned by Olivetti and 25% by Mannesman),
Bell Atlantic, AirTouch, Mannesmann and Telia. Olivetti is one of Italy's
largest companies
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and has been involved in the private voice and data communications network
industry for over ten years. Bell Atlantic Mobile operates in more than fifteen
U.S. states making it one of the largest suppliers of cellular services in the
United States. AirTouch is one of the world's largest wireless
telecommunications operators. Mannesmann is a subsidiary of Mannesmann AG, one
of Germany's ten largest industrial conglomerates and owner of the largest
interest in Germany's D2 Private GSM system. Telia was a pioneer in European
cellular communications and an initiator of the GSM system. Telia is at present
participating in the development of cellular systems in almost 20 different
countries, either directly or in collaboration with national telephone
operators. None of the Corporate Partners has any obligations with respect to
the Notes or (except as otherwise set forth herein) to provide services or
financial support to OPI.
COMPETITION
OPI competes with wireline telephone service offered by Telecom Italia, and
the cellular telephone service offered by TIM, as well as with at least one
additional wireless license to be granted in 1998 and at least partially with
Telecom Italia's recently launched low mobility DECT service. TIM has a
significant advantage over OPI in the Italian cellular telephone market, with
approximately 9.2 million analog and GSM subscribers as of January 1, 1998. TIM
has certain advantages over OPI such as a larger customer base, more operating
spectrum and the use of the Telecom Italia name. Many high usage business
customers were already TIM cellular customers by late 1995 and remain TIM
subscribers. Moreover, OPI may also face significant potential competition from
other communications technologies that are being or may be developed or
perfected in the future. See "Risk Factors -- Competition."
GOVERNMENT REGULATION
OVERVIEW. The legal framework for the regulation of the telecommunications
sector in Italy has been extensively revised in recent years. This revision has
included the liberalization of substantially all telecommunications services,
the formation of the Communications Authority, the independent agency to
regulate the communications industry, the implementation of the Framework Law,
and the adoption of the Telecommunications Regulations by the Italian Government
pursuant to Law No. 650 of December 23, 1996 ("Law 650") and Law No. 189 of July
1, 1997 ("Law 189") to implement a number of EU directives in the
telecommunications sector. Effective August 1, 1997, the former Ministry of
Posts and Telecommunications changed its name to the Ministry of Communications.
The Telecommunications Regulations became effective on October 7, 1997.
The Framework Law in general aims at (i) ensuring the improvement of
competition and efficiency in the telecommunications sector; (ii) establishing
adequate quality standards; (iii) ensuring access to telecommunications services
in a homogeneous manner throughout Italy; (iv) defining a clear and transparent
tariff system based on the "price cap" method which will apply to Telecom
Italia's fixed public voice telephony services for up to two years from August
1, 1997 and (v) protecting consumers' and users' interests.
The Telecommunications Regulations contain provisions concerning (i) the
granting of general authorizations or individual licenses to provide
telecommunications services; (ii) universal service obligations and their
financing; (iii) access contributions; (iv) special obligations imposed on
operators having significant market power, including the determination of
interconnection charges using principles of cost orientation; (v) numbering and
number portability; (vi) rights of way; and (vii) the essential requirements
that must be complied with in the provision of services and when interconnecting
between public telecommunications networks. The Communications Authority is
expected to establish detailed regulations governing the telecommunications
sector and will monitor their application, while the Ministry of Communications
will retain the responsibility for defining telecommunications policy in Italy,
and will have the power and authority to grant authorizations and licenses.
The activities of OPI and TIM are also subject to the terms and conditions
of their public operating concessions (the "Public Concessions").
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Other significant telecommunications measures include Law No. 58 of January
29, 1992 ("Law 58"), implementing regulations and the Ministry of Communications
decrees principally promulgated with respect to tariffs, and Regulation No. 197
of May 8, 1997, concerning telephone service and subscriptions contracts.
THE COMMUNICATIONS AUTHORITY. The Communications Authority will consist of
a President appointed by the Italian Government through a Presidential decree, a
Committee for Infrastructures and Networks, a Committee for Products and
Services and the Council. Each of the Committees' members will be selected by
the Italian Parliament (four by the Senate and four by the Chamber of Deputies)
and appointed through a Presidential decree. Each of the Committees and the
Council will be responsible for establishing regulations for their specific
areas.
The Committee for Infrastructures and Networks will be responsible for,
among other things, guidelines for allocating radio frequencies relating to
telecommunications services; defining objective and transparent criteria for
establishing tariffs for interconnection and network access; regulating
relationships among telecommunications companies; settling disputes regarding
interconnection; and defining the scope of the universal service obligation and
the operators subject to it, together with criteria for calculating and sharing
its costs.
The Committee for Products and Services will be responsible for, among
other things, issuing guidelines for regulating product quality and conformity
with EU directives governing the relationship between companies controlling
fixed or mobile telecommunications networks and telecommunications service
providers.
The Council will be responsible for, among other things, adopting
regulations establishing criteria for issuing licenses for the
telecommunications sector and for TV and radio activities (including cable and
satellite broadcasting) pursuant to Presidential Decree No. 318/97.
The Communications Authority will have investigative powers, as well as the
authority to impose sanctions on operators who do not comply with their
directives and resolutions. In addition, the Communications Authority will be
entitled to propose to the Ministry of Communications the revocation and/or
suspension of general authorizations and individual licenses in the event of
repeated violations by the holder.
PUBLIC CONCESSIONS. The Public Concessions of OPI and TIM are embodied in
a conventions setting out their obligations relating to the provision of public
services (the "Conventions"). Pursuant to these Public Concessions, OPI and TIM
were each granted non-exclusive rights for the installation and operation of a
mobile telecommunications network for the provision of telecommunications
services. The Public Concessions will expire in 2010. OPI and TIM are subject to
parallel rules and regulations concerning the provision of GSM services. The
services must be rendered in accordance with the terms and conditions set forth
in the Conventions, which address, among other matters, radio frequency
allocation, commencement of operations, price controls and service requirements.
TIM's GSM service commenced operations in April 1995. OPI's service commenced
operations on December 7, 1995.
Specifically, the GSM concessions require each of OPI and TIM:
- to cover 70% of the Italian national territory and 90% of the population
within five years and to provide service in major towns and cities in
each of the 20 regions of Italy;
- to meet certain technical requirements concerning the provision of GSM
cellular services to end users;
- to sign interconnection agreements with Telecom Italia, as the owner of
the fixed public network, which were entered into in April 1995;
- to pay access charges to Telecom Italia for the use of the connected
wireline telephone network at an average of 200 lire per minute (reduced
to 140 lire per minute for all calls as of June 6, 1997 and, as of August
1, 1997, 200 lire per minute for calls incoming to the mobile network
from the fixed network and 80 lire per minute for calls incoming to the
fixed network from the mobile network); and
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- to deliver to the MOC, upon request, data and information on their
business operations, as well as copies of their audited financial
statements and to observe certain criteria of accounting separation in
relation to the GSM services performed.
The duration of the GSM concessions is 15 years, commencing on February 1,
1995.
As set forth by the Conventions, each licensee's corporate purpose shall be
exclusively the research, design, realization and operation of radiomobile
networks and related services, including rental and sale of telephone software,
equipment and appliances, provided that such ancillary activities do not
interfere with the provision of GSM service and the sound management of the
licensee. Each of the licensees is required by the relevant Convention to
maintain its registered office, and technical and administrative headquarters in
Italy.
The OPI Convention further provides that at least 60% of the OPI share
capital as declared at the time the license was granted be maintained in its
entirety by the relevant shareholders for at least five years as from the date
of granting of the License.
The Conventions expressly state that the licenses cannot be transferred or
assigned, in whole or in part, for any reason whatsoever, unless the MOC has
granted its prior consent. Moreover, upon occurrence of certain material
breaches by the licensees, the MOC may revoke the licenses.
The settlement of any controversy arising from the construction, validity
and performance of the Conventions, to the extent an amicable settlement cannot
be reached within 30 days from the date on which one of the parties has invited
the other to negotiate, shall be remitted to the exclusive jurisdiction of an
arbitration tribunal consisting of five members, two of whom shall be appointed
by the MOC, two of whom shall be appointed by the relevant licensee and the
remaining member shall be appointed by the State Council. The arbitration
tribunal shall sit in Rome and shall decide at law on the basis of Italian
substantive and procedural laws.
The OPI Convention calls for the issuance by OPI of a performance bond
linked to OPI's meeting certain performance and investment goals. OPI would be
subject to monetary penalties for falling to achieve such goals. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
OPI and TIM have licenses to provide mobile telecommunications services
using the advanced DCS-1800 digital technology, subject to the MOC granting
access rights to the required frequencies for the provision of such services.
Pursuant to Law 189, the MOC is expected to grant such frequencies to the GSM
operators during 1998 and to license a third operator to provide such service in
1998. Picienne Italia S.p.A. (the joint venture among Mediaset S.p.A., British
Telecommunications, Italgas S.p.A., ENI S.p.A., Banca Nazionale del Lavoro
S.p.A. and Telenor) and Wind Telecomunicazioni S.p.A. (a consortium including
Deutsche Telekom A.G., France Telecom and ENEL S.p.A.), have both indicated
their intention to bid for the third DCS-1800 license.
The Telecommunications Regulations provide that by January 1, 1999 the
existing Public Concessions will have to be modified in conformity with the new
regulatory framework.
TARIFF AND PRICING POLICY. GSM prices are established autonomously by each
of OPI and TIM, taking into account, among other factors, structure and levels
of prices/tariffs for interchangeable services (analog mobile services and basic
telephony services) and the policies of the main European operators, subject
only to the obligation to give the MOC or the Communications Authority, as
applicable, 30 days' notice of changes in prices. The licensees may not apply
discriminatory contractual conditions to the various end consumers, except that
the right to apply special conditions to particular categories of customers may
be granted by the MOC.
EUROPEAN UNION TELECOMMUNICATIONS LAW. Italy is a member of the EU and, as
such, is required to implement the directives issued by the EU. Although
directives must be incorporated into domestic legislation to be fully effective,
a directive or certain provisions of a directive may take effect automatically
in a member state (a "Member State") on the prescribed deadline if it is
sufficiently clear and specific, even if it is not formally adopted by such
member State by the prescribed deadline. If a directive is not formally
implemented
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<PAGE> 38
by the prescribed deadline, the only remedy available for an interested party is
to seek damages against the Member State. Italy is also the addressee of various
EU resolutions, recommendations and communications, which are not legally
binding, although politically important.
In June 1990, the European Commission adopted a Directive on Competition in
the Markets for Telecommunications Services ("EU Directive 90/388"), which
opened to competition telecommunications services other than fixed public voice
telephony services. In particular, EU Directive 90/388 required the
liberalization of circuit and packet switched data transmission, in accordance
with regulations promulgated by each national regulatory authority. When
initially issued, EU Directive 90/388 did not apply to radio mobile services or
to satellite services. As discussed below, subsequent amendments to EU Directive
90/388 extended its terms to cover such services. EU Directive 90/388 was
formally implemented in Italy by Decree 103.
On January 16, 1996, the European Commission adopted EU Directive 96/2,
liberalizing mobile telecommunications services within the EU (the "Mobile
Telecommunications Directive"). The most important elements of the Mobile
Telecommunications Directive implemented by Law 189 are the following:
- Mobile telecommunications operators are authorized to construct their own
infrastructure for the mobile network or to utilize infrastructure owned
by third parties.
- Direct interconnection among mobile networks is to be guaranteed.
- The number of licenses for mobile telecommunications systems may only be
limited on the basis of essential requirements and in case adequate
frequencies are not available.
- The conditions for granting licenses for access to frequencies and for
interconnection to the fixed public telephony network shall be regulated
with transparency, proportionality and non-discrimination.
The EU competition rules have the force of law in the Member States and are
therefore applicable to OPI's operations in the telecommunications market. The
main principles of the EU competition rules are stipulated in Article 85 of the
EC Treaty. Article 85 prohibits collusive behavior between competitors which may
effect trade between Member States and which restricts, or is intended to
restrict, competition within the EU. These rules are enforced by the European
Commission in cooperation with the national competition authorities, including
the Italian Antitrust Authority. In addition, the national courts have
jurisdiction to litigate violations of EU competition law.
In a decision dated October 4, 1995, the European Commission antitrust
bureau found that the fact that OPI was required to pay the 750 billion lire
($412.8 million) license fee was unfair and discriminatory and undermined the
capability of OPI to effectively compete with Telecom Italia, which was not
asked for any money contribution in connection to the granting of its license
from the MOC. As a result, the European Commission antitrust bureau's 1995
decision stipulated that TIM must compensate OPI in the amount of 60 billion
lire. In October 1997, following a letter by Mr. Karel Van Miert, the chief of
the European Commission antitrust bureau, to the Italian Telecommunications
Minister expressing concern over the delay in implementing the package of
corrective measures regarding mobile telephony in Italy, TIM made a compensation
payment to OPI of approximately 60 billion lire. However, TIM is disputing the
basis for such payments and has recently filed an action seeking to have the 60
billion lire compensation payment nullified.
THE OMNITEL AGREEMENT
The Company, OliMan, Bell Atlantic and Telia have entered into an agreement
(the "Omnitel Agreement"), that contains provisions governing the relationship
between them, including, but not limited to, provisions relating to the
governance and financing of Omnitel.
CAPITALIZATION. Any new capital calls must be unanimously agreed to by the
Omnitel board of directors. Unless a coventurer otherwise consents, its
financial liability with respect to a capital call or any other commitment to
provide funds to Omnitel shall be limited to its pro rata ownership interest
therein.
MANAGEMENT OF OMNITEL. The Omnitel board of directors consists of nine
members, with one member designated by each of the Company and Telia, two
members designated by Bell Atlantic and five members
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<PAGE> 39
initially designated by OliMan, with OliMan designating the chairman of the
board of directors. The presence and unanimous affirmative vote of at least two
of the members of the board of directors designated by OliMan and of all the
other members of the Board is required for any actions, decisions or
determinations relating to the following, among others:
(i) the formation of any subsidiary company or entering into any joint
venture or other similar arrangement;
(ii) the issuance or redemption of any shares, bonds or other securities
of Omnitel;
(iii) the acquisition of shares of or any interest in any corporation or
the creation of any partnership, consortium or other legal entity of
which Omnitel is or will be a partner, member or similar
participant;
(iv) the adoption or amendment of Omnitel's annual budget or future
business plan;
(v) any merger, consolidation or amalgamation with or into any other
company or corporation or the sale or disposition of certain
franchises or licenses;
(vi) the engagement in certain businesses outside the scope of Omnitel's
"object";
(vii) the declaration or payment of dividends or the making of any other
distribution to shareholders;
(viii) the voluntary liquidation, dissolution or termination of Omnitel;
(ix) the amendment of Omnitel's by-laws;
(x) the initial appointment of the independent auditors, and of the
outside counsel to Omnitel; and
(xi) the increase or decrease of the number of members of the Omnitel
Board.
The presence of at least two members of the Board designated by OliMan and
at least all but one of the other members of the Board and the affirmative vote
of at least two of the members of the Board designated by OliMan and at least
all but one of the other members of the Board are required for any actions,
decisions, or determinations of the Omnitel Board (including, without
limitation, a determination to present such matters or proposals to the
shareholders of Omnitel) relating to any of the following matters or proposals:
(i) except as specifically provided for in the annual budget and
future business plan, the lease, acquisition or disposition of any assets
in a transaction or in a series of related transactions having a value in
excess of 300 million lire ($165,000);
(ii) the appointment, granting of powers, dismissal and determination
of the remuneration of the Chairman, the Managing Director or the principal
executive officers of Omnitel;
(iii) any change in the independent auditors, and of the outside
counsel to Omnitel;
(iv) subjection of the property or assets of Omnitel to any mortgage,
lien, pledge, claim or judgment except in the ordinary course of business;
(v) the extension of loans or guarantees to or on behalf of third
parties except in the ordinary course of business in amounts not to exceed
in the aggregate 300 million lire ($165,000) or individually 100 million
lire ($55,000) annually;
(vi) the incurring of indebtedness for borrowed money except in the
ordinary course of business in amounts not to exceed in the aggregate 1.0
billion lire ($550,000), or individually 500 million lire ($275,000)
annually;
(vii) enter into, amend or terminate any transaction with any venturer
or affiliate of any venturer in which the value of the goods and/or
services to be purchased, sold or leased (including compensation or
reimbursement for employees made available to the venturer) would exceed 25
million lire ($14,000) in a transaction or a series of related
transactions; and
(viii) the acceptance of any terms and conditions necessary to obtain
and/or renew a license.
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<PAGE> 40
For any actions, decisions or determinations of the Board which require the
unanimous decision of the Board, the Omnitel venturers, as shareholders of
Omnitel, agreed to vote in conformance with the Board's determination whenever a
resolution of the Shareholders' Meeting is also required. The venturers also
agreed, as shareholders of Omnitel, not to vote in support of any action or
decision which requires a unanimous or supermajority decision of the Board as
described above, unless the Board has first considered such action or decision
and the required affirmative vote of the members of the Board for such action or
decision has been obtained.
The By-laws of Omnitel require only the affirmative vote of 75% of the
members of the Board of Directors to approve the actions described above as
unanimous actions. If such an action were approved by 75% of the Board of
Directors, but not consented to by the Company as required by the Omnitel
Agreement, the Company might not be able to obtain injunctive relief under
Italian law.
CERTAIN TRANSFER OF OMNITEL STOCK. A co-venturer may, without the consent
of the other co-venturers, transfer its Omnitel stock to its affiliates, other
co-venturers or the affiliates of other co-venturers. A co-venturer may not,
however, sell, assign, transfer, pledge, encumber or otherwise dispose of any of
its Omnitel stock to a party who is not an affiliate, a co-venturer or an
affiliate of a co-venturer, without prior written consent of all the other
co-venturers. All transfers of Omnitel stock other than to affiliates, other
co-venturers or affiliates of other co-venturers are subject to a right of first
refusal by the other co-venturers. If more than one co-venturer exercises the
right of first refusal, each of the co-venturers may purchase a pro rata portion
of such Omnitel stock (based upon the total number of shares owned by all
co-venturers exercising the right of first refusal). Such rights of first
refusal may be exercised at the price indicated by the transferring co-venturer
in a notice that must be sent by the transferring co-venturer to the remaining
co-venturers prior to effecting a transfer that gives rise to a right of first
refusal. See "Risk Factors -- Holding Company Structures; Minority Interests;
Limitations on Access to Cash Flow."
CHANGE IN CONTROL OF A CO-VENTURER; RIGHTS OF FIRST REFUSAL. If more than
50 percent of the shares of voting securities of a co-venturer (the "Selling
Co-Venturer") are transferred to a third party (or parties) that is not an
affiliate of the Selling Co-Venturer (an "Omnitel Change in Control"), each
co-venturer (a "Buying Co-Venturer") shall have the non-assignable right to
purchase all or a pro rata portion (based upon the total number of shares owned
by co-venturers exercising such right to purchase) of the Selling Co-Venturer's
shares of Omnitel stock at a price indicated by the Selling Co-Venturer. In the
event a Buying Co-Venturer objects to the price so indicated, it shall be
settled by arbitration. The acquisition of control of any parent company of a
co-venturer which owns or operates substantial other businesses or entities in
addition to the venture is not deemed to constitute an Omnitel Change in
Control.
REQUIRED SALE UPON DEFAULT IN REQUIRED CAPITAL CONTRIBUTION. If a
co-venturer willfully fails to make required capital contributions, the other
co-venturers shall have the non-assignable option to purchase such co-venturer's
Omnitel stock for a cash price equal to the paid-in-capital represented by such
stock.
ADDITIONAL REQUIRED SALES. The following may also give rise to the
granting of a non-assignable option to purchase co-venturer's Omnitel stock at
the cash price equal to the paid-in-capital represented by such stock: (i) the
failure by a co-venturer to perform any material obligation under the Omnitel
Agreement; (ii) the filing of a bankruptcy petition by a co-venturer, or (iii) a
willful violation or breach by a co-venturer of any of the covenants in the
Omnitel Agreement. If the non-assignable option to purchase a defaulting co-
venturer's Omnitel stock were triggered and the defaulting party refused to sell
its Omnitel stock, thereby breaching the relevant provisions of the Omnitel
Agreement, under Italian law, the Company may face difficulty in becoming the
record owner of the Omnitel stock and could thus be forced to bring an action
for damages against the co-venturer refusing to comply with such provisions.
COVENANT NOT TO COMPETE. The co-venturers have agreed that, at all times
during which they own Omnitel stock and for two years following the disposition
to an unaffiliated third party thereof, they will not engage in the business of
building, owning or operating a cellular mobile telephone network or providing
mobile telecommunications services (a "Competing Business") in Italy without the
consent of Olivetti and at least all but one of the other co-venturers, which
consent is not to be unreasonably withheld; provided, however, that a
co-venturer may own less than 10 percent of a Competing Business if the
co-venturer is not
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<PAGE> 41
represented on the board and has no active role in the management of the
Competing Business. Each of the co-venturers and their affiliates may, however,
engage in or possess an interest in any other business in Italy or any Competing
Business outside of Italy.
THE OPI AGREEMENT
Omnitel and Pronto Italia have entered into an agreement (the "OPI
Agreement"), that contains provisions governing the relationship between them,
including, but not limited to, provisions relating to the governance and
financing of OPI.
CAPITALIZATION. Each of Omnitel and Pronto Italia had originally committed
to contribute, pro rata to its holdings, to the capital of OPI an aggregate
total not exceeding 1,000 billion lire ($550 million) (the "Mandatory Capital
Calls"). Such amount has been subsequently increased to 1,450 billion lire ($798
million). In the event that the capital requirements of OPI exceed the Mandatory
Capital Calls, Omnitel and Pronto Italia are entitled to subscribe to such
additional capital calls but are not obligated to do so.
SHARE TRANSFERS. Omnitel and Pronto Italia have agreed for a period of
five years from the award of the License to be bound by the restrictions on
share transfers as required by the License terms. Each of Omnitel and Pronto
Italia has undertaken not to transfer any of the shares it holds at any time in
OPI except to another party to the OPI Agreement. To the extent that under the
terms of the License or any applicable law, or regulation the sale of OPI shares
is or becomes permitted only in part, the obligation not to transfer OPI shares
shall terminate in the first instance in respect of the shares of Pronto Italia
in OPI, and shall expire in respect of the shares held by Omnitel only when the
amount of shares that can be transferred exceeds 30% of the capital of OPI.
Prior to the grant of the License, the shareholders of Omnitel have offered in a
letter to the MOC to collectively maintain at least 86% of the share ownership
of Omnitel for the first five years of the License.
MANAGEMENT OF OPI. The OPI board of directors includes the non-executive
Chairman designated by Pronto Italia, the Managing Director and Chief Financial
Officer designated by Omnitel and the Chief Technical Officer designated jointly
by Bell Atlantic and AirTouch or in the event of their failure to reach
agreement in such designation by OliMan. A decision of a Special Majority (which
requires the favorable vote of at least one director designated by Pronto
Italia) of the Board of Directors is required for the following matters, among
others: (i) certain agreements between OPI and any subsidiary of its
shareholders or any company in which any shareholder has a direct or indirect
voting interest of 25% or more; (ii) adoption by OPI of annual budgets and
business plans and material amendments thereto; (iii) investments by OPI in
assets in excess in the aggregate of 5 billion lire ($2.8 million); (iv)
incurrence by OPI of indebtedness (excluding ordinary bank loans) exceeding 5
billion lire ($2.8 million); (v) granting of loans exceeding 5 billion lire
($2.8 million) to any single party; and (vi) recommendations in respect of the
distribution of dividends.
COVENANTS NOT TO COMPETE. Omnitel and Pronto Italia have agreed that, at
all times the OPI Agreement remains in effect and for two years following the
termination thereof or until any party ceases to be a party whenever such event
may occur, they nor any company directly or indirectly controlled by either of
them, or any company which directly or indirectly controls either of them, will
not involve themselves or itself, as the case may be, in any way, through
participation in excess of 15%, or of 5% as regards quoted companies, in
wireless activities in Italy (other than the supply of goods and services to
cellular telephone systems) regarding cellular telephony systems which fall
within the "object" of OPI. Each of Omnitel and Pronto Italia and their
shareholders may, however, engage in any activity (with the exception of PCN
services) to which the parties decide not to extend OPI's mission, if their
engaging in such activity will not distract resources and commitment from the
mission of OPI.
EMPLOYEES
The Company has 15 full and part-time employees.
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<PAGE> 42
PROPERTIES
The Company leases office space, which is adequate to meet its needs at
present from one of its former affiliates, NTL, and is charged for its share of
the rent by NTL.
LEGAL PROCEEDINGS
OPI is engaged in ordinary legal disputes and court proceedings that have
arisen in the course of its operations, none of which is expected to have a
material adverse effect on its operations. OPI and TIM have each filed lawsuits
in Italy against each other involving various competitive matters. See
"Business -- Government Regulation -- European Union Telecommunications Law." In
addition, in a currently pending matter, TIM has claimed that OPI had not
satisfied a requirement that its network cover at least 40% of the Italian
territory at the time of the launch of its commercial services in December 1995,
and OPI has counterclaimed seeking damages for TIM's delay in permitting
national roaming.
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<PAGE> 43
MANAGEMENT
The directors and officers of the Company and their ages as of February 28,
1998, and positions with the Company are set forth below:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
William B. Ginsberg....................... 54 Chairman of the Board, President, Chief Executive
Officer and Director
J. Barclay Knapp.......................... 41 Executive Vice President, Chief Operating Officer
and Director
Richard J. Lubasch........................ 51 Senior Vice President-General Counsel, Treasurer and
Secretary
Gregg Gorelick............................ 39 Vice President-Controller
Stanton N. Williams....................... 36 Vice President-Chief Financial Officer
Sidney R. Knafel.......................... 67 Director
Del Mintz................................. 70 Director
Alan J. Patricof.......................... 63 Director
Warren Potash............................. 66 Director
</TABLE>
WILLIAM B. GINSBERG has been President, Chief Executive Officer and a
director of the Company from and prior to the Distribution. In April 1994, Mr.
Ginsberg was appointed as Chairman of the Company. Mr. Ginsberg had also been
President, Chief Executive Officer and a director of CCI since its founding in
1981 until its merger in August 1996 into a subsidiary of AirTouch
Communications, Inc. (the "CCI Merger").
J. BARCLAY KNAPP has been Executive Vice President, Chief Operating Officer
and a director of the Company from and prior to the Distribution. Mr. Knapp was
also Chief Financial Officer until March 1995. Mr. Knapp was a director and
Executive Vice President, Chief Operating Officer and Chief Financial Officer of
CCI until the CCI Merger. In addition, Mr. Knapp is a director, President, Chief
Financial Officer and Chief Executive Officer of NTL and a director, President
and Chief Operating Officer of CoreComm.
RICHARD J. LUBASCH has been the Company's Vice President-General Counsel
and Secretary from and prior to the Distribution. In April 1994, Mr. Lubasch was
appointed Senior Vice President and Treasurer of the Company. Mr. Lubasch was
Vice President-General Counsel and Secretary of CCI from July 1987 until the CCI
Merger. Mr. Lubasch is Senior Vice President-General Counsel and Secretary of
CoreComm and NTL.
GREGG GORELICK has been the Company's Vice President-Controller from and
prior to the Distribution. From 1981 to 1986 he was employed by Ernst & Whinney
(now known as Ernst & Young LLP). Mr. Gorelick is a certified public accountant
and was Vice President-Controller of CCI from 1986 until the CCI Merger. Mr.
Gorelick also holds that position at NTL and CoreComm.
STANTON N. WILLIAMS has been the Company's Vice President-Chief Financial
Officer since March 1995. He had been the Director of Corporate Development for
the Company from and prior to the Distribution, a title he currently holds at
NTL and held at CCI, until the CCI Merger, and at CoreComm until he was
appointed Vice President-Chief Financial Officer in 1997. Prior to joining CCI
in 1989, Mr. Williams was employed by Arthur Andersen & Co's consulting
division.
SIDNEY R. KNAFEL, a director from and prior to the Distribution, has been
Managing Partner of SRK Management Company, a private investment concern, since
1981. In addition, Mr. Knafel is Chairman of Insight Communications, Inc. and
BioReliance Corporation. Mr. Knafel is also a director of General American
Investors Company, Inc., IGENE Biotechnology, Inc., NTL, CoreComm and some
privately owned companies.
DEL MINTZ, a director of the Company from and prior to the Distribution, is
President of Cleveland Mobile Tele Trak, Inc. and Cleveland Mobile Radio Sales,
Inc. and Ohio Mobile Tele Trak, Inc., companies providing telephone answering
and radio communications services to Cleveland and Columbus, respectively.
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<PAGE> 44
Mr. Mintz has held similar positions with the predecessor of these companies
since June 1967. Mr. Mintz is President of several other companies, and was
President and a principal stockholder of Cleveland Mobile Cellular Telephone,
Inc. before such company was acquired by merger with CCI's predecessor in May
1985. Mr. Mintz is also a director of NTL, CoreComm and several privately owned
companies.
ALAN J. PATRICOF, a director from and prior to the Distribution, is
Chairman of Patricof & Co. Ventures, Inc., a venture capital firm he founded in
1969. Mr. Patricof also serves as a director of NTL, CoreComm and other
privately owned companies.
WARREN POTASH has been a director from and prior to the Distribution. Mr.
Potash retired in 1991 as President and Chief Executive Officer of the Radio
Advertising Bureau, a trade association, a position he held since February 1989.
Prior to that time and beginning in 1986, he was President of New Age
Communications, Inc., a communications consultancy firm. Until his retirement in
1986, Mr. Potash was a Vice President of Capital Cities/ABC Broadcasting, Inc.,
a position he held since 1970. Mr. Potash is also a director of NTL and
CoreComm.
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<PAGE> 45
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock, as of May 12, 1998, after giving retroactive
effect to the 3-for-2 stock split by way of stock divided paid on April 14, 1998
by (i) each executive officer and director of the Company, (ii) stockholders
holding 5% or more of the Company's Common Stock, and (iii) all directors and
executive officers as a group.
<TABLE>
<CAPTION>
SHARES
EXECUTIVE OFFICERS, DIRECTORS AND BENEFICIALLY PERCENT OF
PRINCIPAL STOCKHOLDERS OWNED(1) CLASS(2)
<S> <C> <C>
William B. Ginsberg(3).............................. 1,016,420 5.92%
J. Barclay Knapp(4)................................. 421,764 2.51
Richard J. Lubasch(5)............................... 154,913 *
Gregg Gorelick(6)................................... 60,659 *
Stanton N. Williams(7).............................. 147,450 *
Del Mintz(8)........................................ 422,457 2.55
Sidney R. Knafel(9)................................. 240,434 1.45
Alan J. Patricof(10)................................ 72,178 *
Warren Potash(11)................................... 52,877 *
All directors and officers as a group (9 in
number)........................................... 2,589,152 14.43
Massachusetts Financial
Services Company(12).............................. 1,871,113 11.33
500 Boylston Street
Boston, MA 02116
President and Fellows of
Harvard College(13)................................. 905,325 5.48
600 Atlantic Avenue
Boston, MA 02210
T. Rowe Price Associates, Inc.(14).................. 855,300 5.18
100 E. Pratt Street
Baltimore, MD 21202
</TABLE>
- ---------------
* Represents less than one percent.
(1) Includes shares of Common Stock purchasable upon the exercise of options
which are exercisable or become so in the next 60 days ("Presently
Exercisable Options").
(2) Includes Common Stock and Presently Exercisable Options.
(3) Includes 21,750 shares of Common Stock owned by Mr. Ginsberg's wife, as to
which shares Mr. Ginsberg disclaims beneficial ownership. Includes 656,673
shares of Common Stock subject to stock options granted pursuant to the
Option Plan.
(4) Includes 282,028 shares of Common Stock subject to stock options granted
pursuant to the Option Plan.
(5) Includes 187 shares of Common Stock owned by Mr. Lubasch as custodian for
his child, as to which shares Mr. Lubasch disclaims beneficial ownership.
Includes 111,784 shares of Common Stock subject to stock options granted
pursuant to the Option Plan.
(6) Includes 58,252 shares of Common Stock subject to stock options granted
pursuant to the Option Plan.
(7) Includes 111,000 shares of Common Stock subject to stock options granted
pursuant to the Option Plan.
(8) Includes 20,740 shares of Common Stock owned by Mr. Mintz's children or by
Mr. Mintz's children as trustees for their children, 43 shares owned by Mr.
Mintz's wife and 22,876 shares which were purchased by CBDM, Inc., a
subchapter "S" Corporation that is owned by the children and grandchildren
of Mr. Mintz. Mr. Mintz acts in an advisory capacity to the shareholders of
CBDM, Inc.
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<PAGE> 46
Mr. Mintz disclaims beneficial ownership of all of the shares referenced in this
note. Includes 52,782 shares of Common Stock subject to stock options granted
pursuant to the Director Plan and pursuant to certain stock option agreements
not pursuant to the plan.
(9) Includes 65,311 shares of Common Stock owned by a trust account for the
benefit of a child of Mr. Knafel, as to which shares Mr. Knafel disclaims
beneficial ownership. An additional 65,311 shares are owned by an adult
child of Mr. Knafel, as to which shares Mr. Knafel disclaims beneficial
ownership. Includes 52,782 shares of Common Stock subject to stock options
granted pursuant to the Director Plan and pursuant to certain stock option
agreements not pursuant to the plan.
(10) Includes 117 shares of Common Stock owned by Mr. Patricof's wife, 454
shares owned by, or in trust for the benefit of, Mr. Patricof's children as
to which Mr. Patricof disclaims beneficial ownership. Includes 52,782
shares of Common Stock subject to stock options granted pursuant to the
Director Plan and pursuant to certain stock option agreements not pursuant
to the plan.
(11) Includes 52,782 shares of Common Stock subject to stock options granted
pursuant to the Director Plan and pursuant to certain stock option
agreements not pursuant to the plan.
(12) Based solely upon a Form 13-G, amendment No. 2, dated February 13, 1998,
filed by Massachusetts Financial Services Company.
(13) Based solely upon a Form 13-G, dated February 12, 1998, filed by President
and Fellows of Harvard College.
(14) Based solely upon a Form 13-G, dated February 12, 1998, filed by T. Rowe
Price Associates, Inc.
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<PAGE> 47
DESCRIPTION OF THE NOTES
GENERAL
The New Notes offered hereby will be issued pursuant to an indenture (the
"Indenture") dated as of March 18, 1998, by and between the Company and The
Chase Manhattan Bank, as trustee (the "Trustee"). The terms of the New Notes
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"). The New Notes are subject to all such terms, and Holders of New Notes are
referred to the Indenture and the Trust Indenture Act for a statement thereof.
The following summary of certain provisions of the Indenture does not purport to
be complete and is qualified in its entirety by reference to the Indenture,
including the definitions therein of certain terms used below. The definitions
of certain terms used in the following summary are set forth below under
"Certain Definitions." As used in this "Description of the Notes," the term the
"Company" means Cellular Communications International, Inc. exclusive of its
subsidiaries.
The New Notes will be senior unsecured obligations of the Company and will
rank senior in right of payment to all future subordinated Indebtedness of the
Company (including the Convertible Notes). The New Notes will rank pari passu
and without any preference among themselves with all unsecured and
unsubordinated obligations of the Company. However, because the Company is
primarily a holding company with limited business operations of its own and no
substantial assets other than the Equity Interests of its Subsidiaries and
affiliated companies, the New Notes will be effectively subordinated to all
existing and future Indebtedness of the Company's Subsidiaries and Minority
Owned Affiliates. In addition, the New Notes will be effectively subordinated to
any secured Indebtedness of the Company. See "Risk Factors -- Holding Company
Structure; Minority Interests; Limitations on Access to Cash Flow."
As of the date of this Prospectus, the Company has no Restricted
Subsidiaries or Restricted Affiliates. The Company's current affiliated
companies, including Omnitel and OPI, will not constitute Restricted
Subsidiaries or Restricted Affiliates under the Indenture and, therefore, will
not be subject to the restrictions set forth in the Indenture unless they are
designated as Restricted Affiliates. Under certain circumstances, the Company
will be able to designate current or future Subsidiaries as Unrestricted
Subsidiaries. Unrestricted Subsidiaries will not be subject to the restrictive
covenants set forth in the Indenture. The Company and its Subsidiaries will be
prohibited from incurring any Liens, other than Permitted Liens, on their direct
interests in the Capital Stock of Omnitel.
For each Old Note accepted for exchange, the holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Old Note.
All Old Notes and New Notes will be treated as a single class of securities
under the Indenture.
PRINCIPAL, MATURITY AND INTEREST
The New Notes will be limited in aggregate principal amount at maturity to
EURO 235 million and will mature on April 1, 2005. The Old Notes were offered at
a substantial discount from their principal amount at maturity. See "Certain
United States Federal Income Tax Considerations." Until April 1, 2003, no
interest will accrue, but the Accreted Value will accrete (representing the
amortization of original issue discount) between the date of original issuance
and April 1, 2003, on a semiannual bond equivalent basis using a 360-day year
comprised of twelve 30-day months such that the Accreted Value shall be equal to
the full principal amount of the Notes on April 1, 2003 (the "Full Accretion
Date"). The initial Accreted Value per EURO 1,000 in principal amount of Notes
will be EURO 624.55 (representing the original price at which the Old Notes were
offered in the Offering). Beginning on April 1, 2003, interest on the New Notes
will accrue at the rate of 9 1/2% per annum and will be payable in EUROs
semiannually in arrears on October 1 and April 1, commencing on October 1, 2003,
to Holders of record on the immediately preceding September 15 and March 15. If
any date on which principal and interest shall be paid is not a Business Day,
the payment due on such date shall be made on the next succeeding Business Day
and interest shall not accrue to such Business Day. Holders of record on such
record dates will become irrevocably entitled to receive accrued interest, in
respect of the interest period during which such record date occurs as of the
close of business on such record
41
<PAGE> 48
date. Interest on the Notes will accrue from the most recent date to which
interest has been paid or duly provided for or, if no interest has been paid or
duly provided for, from the date of original issuance. Interest will be computed
on the basis of a 360-day year comprised of twelve 30-day months. Principal,
premium, if any, and interest, if any, on the Notes will be payable in EUROs
only by credit or transfer to a EURO account (or, prior to the introduction of
the EURO at the third stage of European economic and monetary union, will be
payable in ECU only by credit or transfer to an ECU account at the rate of one
ECU for one EURO) located in the place of payment (outside the United States)
specified by the relevant payee. Payments in a component currency of the EURO or
ECU (if so determined as provided below) will be made in the chosen currency (as
referred to below) either by check drawn on, or by transfer to an account
specified by the payee with, a bank in the principal financial center of the
country of the chosen currency. The New Notes will be issued in denominations of
EURO 1,000 principal amount at maturity and integral multiples thereof.
References in the New Notes and the Indenture to any business day,
day-count fraction or other convention (whether for the calculation of interest,
determination of payment dates or otherwise) shall, if different, with effect
from the introduction of the EURO at the start of the third stage of European
economic and monetary union, be deemed to be amended to comply with any
conventions applicable to EURO-denominated obligations pursuant to applicable
requirements of relevant monetary, stock exchange or other authorities,
applicable EC and national laws and regulations and such market practices
consistent therewith as the Trustee, in its discretion, shall determine to be
applicable for such EURO-denominated obligations held in international clearing
systems and the terms and conditions of the New Notes and the Indenture shall be
amended accordingly. Notice of any such amendments shall be notified to the
Holders of the New Notes.
The New Notes will be payable both as to principal and interest (on
presentation of such New Notes if in certificated form) at the offices or
agencies of the Company maintained for such purpose within the City and State of
New York and London, England and, so long as the New Notes are listed on the
Luxembourg Stock Exchange, at the office of the paying agent maintained in
Luxembourg or, at the option of the Company, payment of interest may be made by
check mailed to the holders of the New Notes at their respective addresses set
forth in the register of holders of New Notes or, if a holder so requests, by
wire transfer of immediately available funds to an account previously specified
in writing by such holder to the Company and the Trustee. Until otherwise
designated by the Company, the Company's office or agency in New York and
London, respectively, will be the offices of the Trustee maintained for such
purpose. The Company has designated Banque Internationale a Luxembourg to act as
paying agent in Luxembourg. Each of the New Notes will be payable on maturity
April 1, 2005 at 100% of its principal amount and will be issued in registered
form, without coupons, and in denominations of EURO 1,000, as applicable, and
integral multiples thereof. Holders of New Notes who receive payment in any
currency other than the EURO must make arrangements at their own expense.
OPTIONAL REDEMPTION
The New Notes will not be redeemable at the Company's option prior to April
1, 2002. Thereafter, the New Notes will be redeemable by the Company, upon not
less than 30 nor more than 60 days' notice, at a redemption price equal to the
percentage of the Accreted Value set forth below if redeemed during the 12-month
period beginning April 1 of the years indicated:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
<S> <C>
2002........................................................ 104.750%
2003........................................................ 103.167%
2004........................................................ 101.583%
2005........................................................ 100.000%
</TABLE>
together, in the case of any redemption subsequent to the Full Accretion Date,
with accrued and unpaid interest, if any, to the redemption date (subject to the
right of Holders of record on the relevant record dates to receive interest due
on an interest payment date).
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<PAGE> 49
If less than all of the New Notes issued under the Indenture are to be
redeemed, the Trustee will select such New Notes or portions thereof to be
redeemed pro rata, by lot or by any other method that the Trustee shall deem to
be fair and reasonable.
The Company shall have the right to purchase the New Notes in the open
market or otherwise. Any New Notes so purchased may be resold at the Company's
discretion if not surrendered to the Paying Agent for cancellation.
MANDATORY REDEMPTION
Except as set forth below under "-- Repurchase at the Option of Holders,"
the Company is not required to make mandatory redemption or sinking fund
payments with respect to the New Notes.
REPURCHASE AT THE OPTION OF HOLDERS
Change of Control
Upon the occurrence of a Change of Control, the Company will be required to
make an offer to each Holder of New Notes to repurchase all or any part (equal
to EURO 1,000 in principal amount at maturity or an integral multiple thereof)
of such Holder's New Notes (a "Change of Control Offer") at an offer price in
cash equal to 101% of the Accreted Value thereon as of the date of purchase, if
any, in accordance with the procedures as set forth in the Indenture. The
Company will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable to a Change of Control Offer.
Except as described above with respect to a Change of Control, the
Indenture does not contain provisions that permit the Holders of the New Notes
to require that the Company repurchase or redeem the New Notes in the event of a
takeover, recapitalization or similar restructuring. There can be no guarantee
that the Company will have sufficient cash resources to honor its obligations in
the event of a Change of Control.
"Change of Control" means (i) the sale, lease, exchange or other transfer
of all or substantially all of the assets of the Company to any "person" or
"group" (within the meaning of Sections 13(d)(3) and 14(d)(2) of the Exchange
Act or any successor provision to either of the foregoing, including any group
acting for the purpose of acquiring, holding or disposing of securities within
the meaning of Rule 13d-5(b)(i) under the Exchange Act) other than a Wholly
Owned Restricted Subsidiary of the Company or one or more Permitted Holders,
(ii) the merger or consolidation of the Company with or into another corporation
or the merger of another corporation into the Company with the effect that
either (A) immediately after such transaction any "person" or "group" (as so
defined) shall have become the beneficial owner of securities of the surviving
corporation of such merger or consolidation representing a majority of the
combined voting power of the outstanding securities of the surviving corporation
ordinarily having the right to vote in the election of directors or (B) the
securities of the Company that are outstanding immediately prior to such
transaction and which represent 100% of the combined voting power of the
securities of the Company ordinarily having the right to vote in the election of
directors are changed into or exchanged for cash, securities or property, unless
pursuant to such transaction such securities are changed into or exchanged for,
in addition to any other consideration, securities of the surviving corporation
that represent immediately after such transaction, at least a majority of the
combined voting power of the securities of the surviving corporation ordinarily
having the right to vote in the election of directors, (iii) any "person" or
"group" (as so defined) becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) of more than 50 percent of the total voting power of all
classes of the voting stock of the Company ordinarily having the right to vote
in the election of directors calculated on a fully diluted basis or (iv) during
any period of two consecutive years, individuals who at the beginning of such
period constituted the Company's Board of Directors (together with any new
directors whose election or appointment by such board or whose nomination for
election by the shareholders of the Company was approved by a vote of a majority
of the directors then still in office who were either directors at the beginning
of such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Company's Board
of Directors then in office; provided, that no Change of Control will be deemed
to occur pursuant to this section if the New Notes have a
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<PAGE> 50
rating of at least BBB- by S&P or a rating of at least Baa3 by Moody's for a
period of at least 30 consecutive days, beginning on the date of such event
(which period will be extended up to 90 additional days for as long as the
rating of the New Notes are under publicly announced consideration for possible
downgrading by the applicable rating agency).
Asset Sales
The Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary of the Company, Restricted Affiliate or Restricted
Subsidiary of a Restricted Affiliate to, engage in an Asset Sale unless (i) no
Event of Default is existing or no Default or Event of Default would arise by
virtue of such Asset Sale, (ii) the Company (or the applicable Restricted
Subsidiary or Restricted Affiliate, as the case may be) receives consideration
at the time of such Asset Sale at least equal to the fair market value
(evidenced by (x) a resolution of the Board of Directors so long as the Company
is a publicly-traded entity or (y) an opinion as to the fairness of the
transaction from a financial point of view by an investment banking firm of
national standing if the Company is not a publicly-traded entity) of the assets
sold or otherwise disposed of and (iii) at least 85% of the consideration
therefor received by the Company or such Restricted Subsidiary or Restricted
Affiliate is in the form of cash or readily marketable cash equivalents;
provided, however, that the amount of (A) any liabilities of the Company, any
Restricted Subsidiary or Restricted Affiliate as shown on the Company's or such
Restricted Subsidiary's or Restricted Affiliate's most recent balance sheet or
in the notes thereto that are assumed by the transferee of any such asset sale
and (B) any notes or other obligations received by the Company or such
Restricted Subsidiary or Restricted Affiliate from such transferee that are
immediately converted or are converted within 60 days by the Company or such
Restricted Subsidiary or Restricted Affiliate into cash (to the extent of the
cash received), shall be deemed to be cash for purposes of this paragraph. The
foregoing shall not apply to a sale or other transfer of any direct interest in
OPI which is prohibited in all instances.
Any Net Proceeds from an Asset Sale that are not applied within 12 months
after such Asset Sale to make a Permitted Investment (other than an Investment
in Cash Equivalents) will be deemed to constitute "Excess Proceeds." Pending
final application of any Net Proceeds of an Asset Sale to a Permitted Investment
(other than Cash Equivalents) or to an Asset Sale Offer, such Net Proceeds may
only be invested in Cash Equivalents. When the aggregate amount of Excess
Proceeds exceeds $5 million and upon completion of the Asset Sale Offer required
under the indenture governing the Original Notes, the Company will be required
to make an offer to all Holders of New Notes (an "Asset Sale Offer") to purchase
the maximum principal amount of New Notes that may be purchased out of the
Excess Proceeds, at an offer price in cash equal to 100% of the Accreted Value
thereof as of the date of purchase, in accordance with the procedures set forth
in the Indenture. To the extent that the aggregate Accreted Value of New Notes
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds to be
applied to purchase New Notes, the Company may use any remaining Excess Proceeds
for any purpose permitted by the other provisions of the Indenture. If the
aggregate Accreted Value of New Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee will select the New Notes to be purchased
on a pro rata basis with appropriate adjustments so that only New Notes in
authorized denominations will be purchased. Upon completion of each Asset Sale
Offer, the amount of Excess Proceeds shall be reset at zero. The Company will
comply with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable to an Asset Sale Offer.
The Indenture also provides that, notwithstanding the foregoing, to the
extent that the Company or any of its Restricted Subsidiaries or Restricted
Affiliates receives securities or other noncash property or assets as proceeds
of an Asset Sale (which proceeds shall not exceed 25% of the total initial
consideration), such securities and other noncash proceeds will not be treated
as Net Proceeds of an Asset Sale unless and until the Company receives cash or
Cash Equivalents from a sale, repayment, exchange, redemption or retirement of,
or extraordinary dividend or return of capital on, such securities or other
noncash property and then will be treated as Net Proceeds only to the extent of
the cash or Cash Equivalents received.
In the event of a repurchase or redemption as described above, notice of
such redemption shall be made in accordance with the procedures specified in
"General Listing Information -- Notices."
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<PAGE> 51
One Business Day prior to a repurchase or redemption date, the Company
shall deposit with the Trustee or with the Paying Agent money sufficient to pay
the redemption price of and accrued interest on all New Notes to be redeemed on
that date. The Trustee or the Paying Agent shall promptly return to the Company
any money deposited with the Trustee or the Paying Agent by the Company in
excess of the amounts necessary to pay the redemption price of, and accrued
interest on all New Notes to be redeemed. If a New Note is redeemed on or after
an interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest shall be paid to the Person in whose name
such New Note was registered at the close of business on such record date.
CERTAIN COVENANTS
Restricted Payments
The Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary of the Company, Restricted Affiliate or Restricted
Subsidiary of a Restricted Affiliate to, directly or indirectly: (i) declare or
pay any dividend or make any distribution on account of the Equity Interests of
the Company; (ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interests of the Company; (iii) voluntarily purchase, redeem or otherwise
acquire or retire for value, prior to any scheduled maturity or prior to any
scheduled repayment or sinking fund payment, as the case may be, in respect of
any Indebtedness of the Company that by its terms is contractually subordinated
in any respect in right of payment to the prior payment of the New Notes; or
(iv) make any Investment (all such payments and other actions set forth in
clauses (i) through (iv) above being collectively referred to as "Restricted
Payments") unless, at the time of such Restricted Payment, and after giving
effect thereto:
(a) no Default or Event of Default shall have occurred and be
continuing; and
(b) after giving effect to such Restricted Payment on a pro forma
basis, the aggregate amount of all Restricted Payments made on or after the
date of the Indenture shall not exceed the sum of (1) 50% of the
Consolidated Net Income (or, in the case of a Consolidated Net Loss, 100%
of such deficit) of the Company for the period (taken as one accounting
period) from January 1, 1998 to the last day of the last fiscal quarter
preceding the date of the proposed Restricted Payment, plus (2) the
aggregate net proceeds, including the fair market value of property other
than cash (as determined by the Board of Directors, whose good faith
determination shall be conclusive and evidenced by a board resolution
filed), received by the Company from the issuance and sale (other than to a
Restricted Subsidiary of the Company, a Restricted Affiliate or a
Restricted Subsidiary of an Affiliate) on or after date of the Indenture of
shares of its Capital Stock (other than Disqualified Stock) (and any other
of its securities convertible into or exchangeable for Capital Stock, upon
such conversion or exchange), or any options, warrants or other rights to
purchase such Capital Stock (other than Disqualified Stock), plus (3) the
aggregate net proceeds, including the fair market value of property other
than cash (as determined by the Board of Directors, whose good faith
determination shall be conclusive and evidenced by a board resolution),
received by the Company from the issuance or sale (other than to a
Restricted Subsidiary of the Company, a Restricted Affiliate or a
Restricted Subsidiary of an Affiliate) on or after the date of the
Indenture of any Capital Stock of the Company (other than Disqualified
Stock), of any options, warrants or other rights to purchase such Capital
Stock (other than Disqualified Stock), upon the conversion of, or exchange
for Indebtedness of the Company or a Restricted Subsidiary, a Restricted
Affiliate or a Restricted Subsidiary of a Restricted Affiliate.
The foregoing provisions will not prohibit (a) the redemption, repurchase,
retirement or other acquisition for value of any Equity Interests or
Subordinated Indebtedness of the Company in exchange for, or out of (x) the net
cash proceeds of the sale (other than to a Subsidiary of the Company) of other
Equity Interests of the Company (other than any Disqualified Stock), (y) the net
cash proceeds of the sale (other than to a Subsidiary of the Company) of
Subordinated Indebtedness other than the Convertible Notes or (z) $33 million;
(b) the defeasance, redemption or repurchase of any subordinated Indebtedness
(in whole or in part) with the net cash proceeds from an incurrence of Permitted
Refinancing Indebtedness; (c) the distribution of noncash assets provided that
the fair market equity value of all such distributions immediately upon
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<PAGE> 52
distribution, as determined by an investment banking firm of national standing,
shall not exceed $20 million, provided that any such distribution shall not
include the Company's direct ownership interests in Omnitel; and (e) Permitted
Investments.
Not later than the date of making any Restricted Payment (other than an
Investment in Cash Equivalents), the Company shall deliver to the Trustee an
Officers' Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which its calculations were computed.
Incurrence of Indebtedness and Issuance of Disqualified Stock
The Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary of the Company, Restricted Affiliate or Restricted
Subsidiary of a Restricted Affiliate to, directly or indirectly, create, incur,
issue, assume, guaranty or otherwise become directly or indirectly liable with
respect to (collectively, "incur") any Indebtedness (including Acquired Debt)
and that the Company will not issue any Disqualified Stock and will not permit
any Restricted Subsidiary of the Company, Restricted Affiliate or Restricted
Subsidiary of a Restricted Affiliate to issue any shares of preferred stock;
provided, however, that the Company may incur Indebtedness (including Acquired
Debt), or issue shares of Disqualified Stock, if: (i) the Company's Consolidated
Debt to Consolidated Cash Flow Ratio is less than 6.0 to 1, determined on a pro
forma basis (including a pro forma application of the net proceeds therefrom),
as if the additional Indebtedness had been incurred, or the Disqualified Stock
had been issued, as the case may be, at the beginning of the applicable
four-quarter period; or (ii) the Company's Consolidated Debt does not exceed 30%
of the Company's Total Market Capitalization, calculated as of the date of
incurrence or issuance and on a pro forma basis after giving effect to such
incurrence or issuance (including a pro forma application of the net proceeds
therefrom).
The provisions of the foregoing paragraph will not apply to (a) Existing
Indebtedness; (b) commitments existing as of the date of the Indenture by the
Company and its Subsidiaries relating to capital contributions to Omnitel or OPI
(including the funding commitments under OPI's performance bond); (c) the New
Notes; (d) the Convertible Notes; (e) intercompany Indebtedness between or among
the Company and a Wholly Owned Restricted Subsidiary of the Company to the
extent permitted by the other provisions of the Indenture; (f) the incurrence by
the Company, a Restricted Subsidiary of the Company, a Restricted Affiliate or a
Restricted Subsidiary of a Restricted Affiliate of Permitted Refinancing
Indebtedness in exchange for, or the net proceeds of which are used to extend,
refinance, renew, replace, redeem, defease or refund other Indebtedness of the
Company, a Restricted Subsidiary of the Company, a Restricted Affiliate or a
Restricted Subsidiary of a Restricted Affiliate; (g) the incurrence by a
Restricted Subsidiary of the Company, a Restricted Affiliate or a Restricted
Subsidiary of a Restricted Affiliate of Project Financing, provided that no
single Restricted Subsidiary (together with its consolidated Restricted
Subsidiaries and its Restricted Affiliates) and no single Restricted Affiliate
(together with its consolidated Restricted Subsidiaries and its Restricted
Affiliates), pro forma for such incurrence and the application of the net
proceeds therefrom, may, on the date of such incurrence, have an aggregate
principal amount of Project Financing outstanding, determined without
duplication, that exceeds the greater of (1) 5.0x the Consolidated Cash Flow of
such Restricted Subsidiary or Restricted Affiliate for the most recently
completed four full fiscal quarters for which internal financial statements are
available as of the date of such incurrence (calculated on a pro forma basis as
if such Project Financing had been incurred and the proceeds therefrom applied
at the beginning of the applicable four-quarter period) or (2) 200% of the
Consolidated Invested Equity Capital of such Restricted Subsidiary or Restricted
Affiliate at such time; (h) the incurrence by the Company of Subordinated
Indebtedness in an aggregate principal amount (or accreted value, as applicable)
at any one time outstanding (with each issue measured as of the date of its
incurrence and without giving effect to subsequent accretion) not to exceed $20
million (or the equivalent amount in one or more foreign currencies); (i)
Guarantees by the Company or a Restricted Subsidiary of the Company of up to $10
million in principal amount of Project Financing of the Company's Restricted
Subsidiaries, Restricted Affiliates or Restricted Subsidiaries of its Restricted
Affiliates at any one time outstanding and related accrued interest; (j) to the
extent an Investment is permitted to be made by the Company or a Restricted
Subsidiary of the Company, Restricted Affiliate or Restricted Subsidiary of a
Restricted Affiliate under "Restricted Payments," Guarantees by the Company or
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<PAGE> 53
such Restricted Subsidiary of the Company, Restricted Affiliate or Restricted
Subsidiary of a Restricted Affiliate of its obligation to make such Investment;
(k) the incurrence by the Company of additional Subordinated Indebtedness in an
aggregate principal amount (or accreted value, as applicable) at any one time
outstanding (with each issue measured at the date of its incurrence and without
giving affect to subsequent accretion) not to exceed two times the amount (or
the equivalent amount in one or more foreign currencies) of Equity Offering
Proceeds that have been received by the Company since the date of the Indenture
and not used to fund Restricted Payments; (l) Non-Recourse Pledges in connection
with Project Financings; (m) Hedging Obligations so long as such obligations
relate to, and do not have a notional amount greater than, obligations permitted
hereunder in respect of Indebtedness or commitments to make Investments; (n) any
Indebtedness outstanding from time to time under a Credit Facility; provided,
the aggregate amount of such Indebtedness outstanding at any one time shall not
exceed $25 million; (o) Purchase Money Debt, provided the aggregate amount of
such Indebtedness outstanding at any time shall not exceed $25 million; (p)
additional Indebtedness of the Company or its Restricted Subsidiaries,
Restricted Affiliates or Restricted Subsidiaries of Restricted Affiliates, in an
aggregate principal amount (or accreted value, as applicable) not to exceed $20
million at any one time outstanding; (q) additional Indebtedness (other than
Subordinated Indebtedness) of the Company or its Restricted Subsidiaries,
Restricted Affiliates or Restricted Subsidiaries of Restricted Affiliates, in an
aggregate principal amount (or accreted value, as applicable) not to exceed the
excess, if any, of (1) the amount of Implied POP Senior Indebtedness less (2)
$240 million; and (r) additional Subordinated Indebtedness in an aggregate
principal amount (or accreted value, as applicable) not to exceed the excess, if
any, of (1) the amount of Implied POP Subordinated Indebtedness less (2) $75
million.
Liens
The Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary of the Company, Restricted Affiliate or Restricted
Subsidiary of a Restricted Affiliate to, directly or indirectly, create, incur,
assume or otherwise cause or suffer to exist any Lien of any kind (other than
Permitted Liens) upon any property or assets, now owned or hereafter acquired,
of the Company or any such Restricted Subsidiary or Restricted Affiliate, or
upon any income or profits therefrom or assign or convey any right to receive
income therefrom securing any Indebtedness unless the New Notes are secured
equally and ratably; provided that the Company shall not incur any Lien on its
direct interest in Omnitel. The foregoing restrictions will not apply to
Permitted Liens.
Limitation on Sale/ Leaseback Transactions
The Company will not, and will not permit any Restricted Subsidiary of the
Company, Restricted Affiliate or Restricted Subsidiary of a Restricted Affiliate
to, enter into any Sale/Leaseback Transaction with respect to any property
unless (i) the Company or such Restricted Subsidiary or Restricted Affiliate
would be entitled to (A) incur Indebtedness in an amount equal to the
Attributable Debt with respect to such Sale/Leaseback Transaction pursuant to
the covenant described under "Incurrence on Indebtedness and Issuance of
Disqualified Stock" and (B) create a Lien on such property securing such
Attributable Debt pursuant to the covenant described under "Liens," and (ii) the
transfer of such property is permitted by, and the Company or such Restricted
Subsidiary or Restricted Affiliate applies the proceeds of such transaction in
compliance with, the covenant described under "Asset Sales."
Dividend and Other Payment Restrictions Affecting Subsidiaries
The Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary of the Company, Restricted Affiliate or Restricted
Subsidiary of a Restricted Affiliate to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any Restricted Subsidiary or Restricted Affiliate
to (a)(i) pay dividends or make any other distributions to the Company or any
Restricted Subsidiary of the Company, Restricted Affiliate or Restricted
Subsidiary of a Restricted Affiliate (A) on its Capital Stock or (B) with
respect to any other interest or participation in, or measured by, its profits,
or (ii) pay any Indebtedness owed to the Company or any Restricted Subsidiary of
47
<PAGE> 54
the Company, Restricted Affiliate or Restricted Subsidiary of a Restricted
Affiliate (b) make loans or advances to the Company or any Restricted Subsidiary
of the Company, Restricted Affiliate or Restricted Subsidiary of a Restricted
Affiliate or (c) sell, lease or transfer any of its properties or assets to the
Company or any Restricted Subsidiary of the Company, Restricted Affiliate or
Restricted Subsidiary of a Restricted Affiliate, except for such encumbrances or
restrictions existing under or by reason of (i) Existing Indebtedness as in
effect on the date of the Indenture, (ii) the Indenture and the New Notes, (iii)
applicable law, (iv) any instrument governing Indebtedness or Capital Stock of a
Person acquired by the Company or any Restricted Subsidiary of the Company,
Restricted Affiliate or Restricted Subsidiary of a Restricted Affiliate as in
effect at the time of such acquisition (except to the extent such Indebtedness
was incurred or Capital Stock issued in connection with or in contemplation of
such acquisition), which encumbrance or restriction is not applicable to the
Company or any Restricted Subsidiary of the Company, Restricted Affiliate or
Restricted Subsidiary of the Affiliate, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person so
acquired, provided that the Consolidated Cash Flow of such Person is not taken
into account in determining whether such acquisition was permitted by the terms
of the Indenture, (v) any Credit Facility permitted under clause (n) "Incurrence
of Indebtedness and Issuance of Disqualified Stock"; provided, that, with
respect to this clause (v), either (x) at or prior to the time of incurrence of
such Indebtedness, the Company receives from a commercial bank or nationally
recognized investment banking firm (which bank or firm may be a lender or agent
for lenders, or an underwriter, placement agent or financial advisor, under or
in respect of such Indebtedness) a letter or opinion to the effect that the
restrictions contained in the agreement or instrument governing such
Indebtedness are reasonable and customary under the circumstances and are
consistent with those provided in prevailing market conditions at the time for
similar financings by borrowers of similar credit quality or (y) at or prior to
the time of incurrence of such Indebtedness, the Board of Directors of the
Company determines in good faith that, based upon one or more proposals from a
commercial bank or nationally recognized investment banking firm (other than a
bank or firm that is a lender or agent for lenders, or an underwriter, placement
agent or financial advisor, under or in respect of such Indebtedness), the
restrictions contained in the agreement or instrument governing such
Indebtedness are consistent with those provided in prevailing market conditions
at the time of similar financings; or (v) Permitted Refinancing Indebtedness,
provided that the restrictions contained in the agreements governing such
Permitted Refinancing Indebtedness are no more restrictive than those contained
in the agreements governing the Indebtedness being refinanced. A bank or firm
referred to in clause (vi) of the preceding sentence shall under no
circumstances be responsible or liable to the Holders, the Trustee, the Company
or any other Person, and is hereby released and absolved of all such
responsibility and liability, insofar as the same would otherwise arise out of
or in connection with the execution and delivery of the letter of opinion
referred to therein.
Merger, Consolidation or Sale of Assets
The Indenture provides that the Company may not consolidate or merge with
or into another corporation, Person or entity (whether or not the Company is the
surviving corporation), or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets in one or more
related transactions, unless (i) the Company is the surviving corporation or the
entity or the Person formed by or surviving any such consolidation or merger (if
other than the Company) or to which a sale, assignment, transfer, lease,
conveyance or other disposition shall have been made is a corporation organized
or existing under the laws of the United States, any state thereof or the
District of Columbia; (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person to
which a sale, assignment, transfer, lease, conveyance or other disposition shall
have been made assumes all the obligations of the Company pursuant to the
Registration Rights Agreement, the Indenture, and the New Notes; (iii)
immediately after such transaction no Default or Event of Default exists; and
(iv) the Company or any entity or Person formed by or surviving any such
consolidation or merger, or to which a sale, assignment, transfer, lease,
conveyance or other disposition shall have been made (A) will have Consolidated
Net Worth (immediately after the transaction but prior to any purchase
accounting adjustments resulting from the transaction which increases
Consolidated Net Worth) equal to or greater than the Consolidated Net Worth of
the Company immediately preceding the transaction and (B) would, at the time of
such transaction and after giving pro forma effect thereto (as if such
transaction had occurred at the beginning of the most
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recently ended four-quarter period for which internal financial statements are
available immediately preceding the date of such transaction, for purposes of
calculating the Consolidated Debt to Consolidated Cash Flow Ratio, and as if
such transaction had occurred as of such date for purposes of calculating
Consolidated Debt as a percentage of Total Market Capitalization), be permitted
to incur at least $1.00 of additional Indebtedness pursuant to the first
paragraph of the covenant entitled "Incurrence of Indebtedness and Issuance of
Disqualified Stock."
The foregoing paragraph includes a phrase relating to the sale, assignment,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the properties or assets of the Company. Although there is a developing body
of case law interpreting the phrase "substantially all," there is no precise
established definition of the phrase under applicable law.
Transactions with Affiliates
The Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary of the Company, Restricted Affiliate or Restricted
Subsidiary of a Restricted Affiliate to, sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or amend any contract, agreement, understanding,
loan, advance or Guarantee with, or for the benefit of, any Affiliate of the
Company (each of the foregoing, an "Affiliate Transaction"), unless (a) such
Affiliate Transaction is on terms that are fair and reasonable to the Company or
the relevant Restricted Subsidiary or Restricted Affiliate and (b) the Company
delivers to the Trustee (i) with respect to any Affiliate Transaction involving
aggregate payments in excess of $5 million, a resolution of the Board of
Directors set forth in an Officers' Certificate to the effect that such
Affiliate Transaction complies with clause (a) above and that such Affiliate
Transaction has been approved by a majority of the members of the Board of
Directors disinterested with respect to such transaction and (ii) with respect
to any Affiliate Transaction involving aggregate payments in excess of $10
million, an opinion as to the fairness to the Company or such Restricted
Subsidiary or Restricted Affiliate from a financial point of view issued by an
investment banking firm of national standing together with an Officers'
Certificate to the effect that such opinion complies with this clause (ii);
provided, however, that (i) a Permitted Investment in a joint venture in which
none of the other participants in the joint venture is an Affiliate of the
Company shall be deemed not to be an Affiliate Transaction; (ii) the procurement
of management services from NTL in the manner and on the terms set forth under
"Management" shall be deemed not to be an Affiliate Transaction; and (iii) joint
ventures in a Related Business with NTL or CoreComm in which the Company's
interest is directly proportionate to its debt and equity contributions shall
require the approval of a majority of the Board of Directors (rather than of the
disinterested members thereof).
The foregoing restrictions shall not apply to (i) reasonable fees and
compensation paid to, and indemnity provided on behalf of, officers, directors,
employees or consultants of the Company or any Subsidiary of the Company as
determined in good faith by the Company's Board of Directors; (ii) transactions
exclusively between or among the Company and any of its Restricted Subsidiaries,
Restricted Affiliates or Restricted Subsidiaries of Restricted Affiliates or
exclusively between or among such entities, provided such transactions are not
otherwise prohibited by the Indenture; (iii) any agreements as in effect as of
the issue date of the New Notes or any amendment thereto or any transaction
contemplated thereby (including pursuant to any amendment thereto) in any
replacement agreement thereto so long as any such amendment or replacement
agreement is not more disadvantageous to the Holders in any material respect
than the original agreement as in effect on the Issue Date, in each case
including any actions by the Company that are required to comply with such
agreements; (v) Restricted Payments permitted by the Indenture; (vi) any
Permitted Investment; (vii) transactions permitted by, and complying with, the
provisions of the covenant described under "Merger, Consolidation or Sale of
Assets"; (viii) any payment, issuance of securities or other payments, awards or
grants, in cash or otherwise, pursuant to, or the funding of, employment
arrangements and plans approved by the Board of Directors of the Company; (ix)
the grant of stock options or similar rights to employees and directors of the
Company and its Subsidiaries pursuant to plans and employment contracts approved
by the Board of Directors of the Company; or (x) loans or advances to officers,
directors or employees of the Company or its Restricted Subsidiaries, not in
excess of $5 million at any one time outstanding.
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Limitations on Lines of Business
The Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary of the Company, Restricted Affiliate or Restricted
Subsidiary of a Restricted Affiliate to, directly or indirectly engage in any
line or lines of business other than a Related Business.
Designation of Restricted Subsidiary as Unrestricted Subsidiary and Restricted
Affiliate as Unrestricted Affiliate; Redesignation of Unrestricted Subsidiary as
Restricted Subsidiary and Unrestricted Affiliate as Restricted Affiliate
The Indenture provides that the Board of Directors may designate a
Restricted Subsidiary of the Company or of a Restricted Affiliate to be an
Unrestricted Subsidiary and may designate a Restricted Affiliate to be an
Unrestricted Affiliate if no Default or Event of Default shall have occurred and
be continuing, and if, after giving pro forma effect to such designation, the
Company would have been permitted to make at least $1.00 of additional
Investments pursuant to clause (f) of the definition of Permitted Investments.
Upon the designation of any Restricted Subsidiary as an Unrestricted Subsidiary,
or the designation of any Restricted Affiliate as an Unrestricted Affiliate, all
previous Investments by the Company and the Company's Pro Rata Portion of any
Investments by any of its Restricted Subsidiaries or Restricted Affiliates in
such Restricted Subsidiary or Restricted Affiliate (in all other cases) will be
deemed to constitute an Investment made on the date of such designation in an
Unrestricted Subsidiary or Unrestricted Affiliate, as applicable, in an amount
equal to the greatest of (x) the aggregate original fair market value of such
Investments (or the Company's Pro Rata Portion thereof, as applicable) as
determined in good faith by the Company's Board of Directors, (y) the net book
value of such Investments at the time of such designation (or the Company's Pro
Rata Portion thereof, as applicable), and (z) the fair market value of such
Investments at the time of such designation (or the Company's Pro Rata Portion
thereof, as applicable) as determined in good faith by the Company's Board of
Directors. Such designation will only be permitted if such Investment (or the
Company's Pro Rata Portion thereof, as applicable) would be permitted at such
time by the terms of the covenant entitled "Restricted Payments" and if such
Restricted Subsidiary or Restricted Affiliate otherwise meets the definition of
an Unrestricted Subsidiary or an Unrestricted Affiliate, as applicable, and has
no Indebtedness other than Non-Recourse Debt with respect to the Company and its
Restricted Subsidiaries, its Restricted Affiliates and Restricted Subsidiaries
of Restricted Affiliates.
The Indenture also provides that the Board of Directors may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary and may
designate any Unrestricted Affiliate to be a Restricted Affiliate; provided,
that such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary or Restricted Affiliate, as applicable, of all outstanding
Indebtedness of such Unrestricted Subsidiary or Unrestricted Affiliate, as
applicable, and such designation shall only be permitted if (1) no Default or
Event of Default shall have occurred and be continuing, (2) immediately after
giving pro forma effect to such designation, all Indebtedness of the Subsidiary
or Affiliate so designated would be permitted under the covenant described above
under the caption "Incurrence of Indebtedness and Issuance of Disqualified
Stock" if it were incurred by a Restricted Subsidiary or Restricted Affiliate,
as applicable, on the date of designation and (3) such designation does not and
will not result in the creation of any Lien on any asset of the Company or any
of its Restricted Subsidiaries (including the Subsidiary so designated), except
Liens permitted by the Indenture to be incurred.
Limitation on Status as Investment Company
The Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary of the Company, Restricted Affiliate or Restricted
Subsidiary of a Restricted Affiliate to, conduct its business in a fashion that
would cause it to be required to register as an "investment company" (as that
term is defined in the Investment Company Act of 1940, as amended), or otherwise
become subject to regulation under the Investment Company Act of 1940.
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Reports
The Indenture provides that, whether or not required by the rules and
regulations of the Commission, so long as any New Notes are outstanding, the
Company will furnish to the Holders of New Notes (i) all quarterly and annual
financial information that would be required to be contained in a filing with
the Commission on Forms 10-Q and 10-K if the Company were required to file such
Forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" of the Company and, with respect to the annual
information only, a report thereof by the Company's certified independent
accountants, (ii) all current reports that would be required to be filed with
the Commission on Form 8-K if the Company were required to file such reports and
(iii) any other information that the Company would be required to disclose
pursuant to Section 13 or 15 of the Exchange Act if the Company were required to
disclose such information. In addition, following the consummation of the
exchange offer contemplated by the Registration Rights Agreement, whether or not
required by the rules and regulations of the Commission, the Company will file a
copy of all such information and reports with the Commission for public
availability (unless the Commission will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default in payment when due of the principal or Accreted Value (as
applicable) of the New Notes, at maturity, upon acceleration, repurchase or
otherwise; (ii) the failure to pay interest on the New Notes when the same
becomes due and payable and the default continues for a period of 30 days; (iii)
failure by the Company or any Restricted Subsidiary of the Company, Restricted
Affiliate or Restricted Subsidiary of a Restricted Affiliate to comply for 30
days after notice with any of their obligations described under the captions
"Change of Control," "Asset Sales," "Restricted Payments" or "Incurrence of
Indebtedness and Issuance of Disqualified Stock"; (iv) failure by the Company or
any Restricted Subsidiary of the Company, Restricted Affiliate or Restricted
Subsidiary of a Restricted Affiliate for 60 days after notice to comply with any
of its other agreements in the Indenture or the New Notes; (v) default under any
mortgage, indenture or instrument under which there may be issued or by which
there may be secured or evidenced any Indebtedness for money borrowed by the
Company or any Restricted Subsidiary of the Company, Restricted Affiliate or
Restricted Subsidiary of a Restricted Affiliate or Omnitel or OPI whether such
Indebtedness or Guarantee now exists or is created after the date of the
Indenture, which default (a) is caused by a failure to pay principal of or
premium, if any, or interest on such Indebtedness prior to the expiration of the
grace period provided in such Indebtedness (a "Payment Default") or (b) results
in the acceleration of such Indebtedness prior to its express maturity and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates $5
million or more (or, in the case of Omnitel or OPI, $25 million or more); (vi)
failure by the Company or any Restricted Subsidiary of the Company, Restricted
Affiliate or Restricted Subsidiary of a Restricted Affiliate or Omnitel or OPI
to pay final judgments of a court of competent jurisdiction aggregating in
excess of $5 million (or, in the case of Omnitel or OPI, $25 million), which
judgments are not paid, discharged or stayed for a period of 60 days; and (vii)
certain events of bankruptcy or insolvency with respect to the Company or any of
its Significant Subsidiaries or Omnitel or OPI; (viii) revocation of the License
or a governmental action that has the effect of preventing OPI from conducting
material operations for a period in excess of 180 continuous days.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding New Notes
may declare all the New Notes to be due and payable immediately. Notwithstanding
the foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency with respect to the Company, all outstanding New Notes
will become due and payable without further action or notice. Except as provided
below in the following paragraph, in the event of any such acceleration of New
Notes, the Company will become obligated to pay the Accreted Value of the New
Notes immediately. Holders of the New Notes may not enforce the Indenture or the
New Notes except
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as provided in the Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding New Notes may direct the
Trustee in its exercise of any trust or power.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding the prohibition on redemption of the New Notes prior
to the fourth anniversary of the Offering, then the premium specified in the
Indenture as to a redemption for the year after the third anniversary of the
Offering shall also become immediately due and payable to the extent permitted
by law upon the acceleration of the New Notes.
The Holders of a majority in principal amount of the New Notes then
outstanding may, by notice to the Trustee, on behalf of the Holders of all of
the New Notes outstanding, waive any existing Default or Event of Default and
its consequences under the Indenture except a Default or Event of Default
relating to the payment of principal of the New Notes (which would be required
to be unanimous).
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default to deliver to the Trustee a
statement specifying such Default or Event of Default.
No Personal Liability of Directors, Officers, Employees and Stockholders
No director, officer, employee, incorporator or stockholder of the Company,
as such, will have any liability for any obligations of the Company under the
New Notes or the Indenture, or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of New Notes by
accepting a Senior Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the New Notes.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the Indenture and the outstanding New
Notes ("Legal Defeasance") except for (i) the rights of Holders of outstanding
New Notes to receive payments in respect of the principal of and premium, if
any, on such New Notes when such payments are due, from the funds held by the
Trustee in the trust referred to below, (ii) the Company's obligations with
respect to the New Notes concerning issuing temporary New Notes, registration of
New Notes, mutilated, destroyed, lost or stolen New Notes and the maintenance of
an office or agency for payment and money for security payments held in trust,
(iii) the rights, powers, trusts, duties and immunities of the Trustee, and the
Company's obligations in connection therewith and (iv) the Legal Defeasance
provisions of the Indenture. In addition, the Company may, at its option and at
any time, elect to have the obligations of the Company released with respect to
certain covenants that are described in the Indenture ("Covenant Defeasance")
and thereafter any omission to comply with such obligations shall not constitute
a Default or Event of Default with respect to the New Notes. In the event
Covenant Defeasance occurs, certain events (not including non-payment,
bankruptcy, receivership, reorganization and insolvency events) described under
"Events of Default" will no longer constitute an Event of Default with respect
to the New Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance which
shall not be effective until at least 91 days after the deposit referred to in
clause (i) of this sentence, (i) the Company must irrevocably deposit with the
Trustee, in trust, for the benefit of the Holders of the New Notes, cash in U.S.
dollars, British pounds, Italian lira or German marks, the ECU, the EURO,
non-callable Government New Notes, or a combination thereof, in such amounts as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of the outstanding New
Notes on the stated maturity of the outstanding New Notes or upon earlier
redemption; (ii) in the case of Legal Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that (A) the Company has received from, or
there has been published by, the Internal Revenue Service a ruling or (B) since
the date of the Indenture, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon such
opinion of counsel shall confirm that, the Holders of the outstanding New Notes
will not recognize income, gain or loss for federal
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income tax purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such Legal Defeasance had not occurred; (iii) in
the case of Covenant Defeasance, the Company shall have delivered to the Trustee
an opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that the Holders of the outstanding New Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred; (iv) no Default or Event of Default
shall have occurred and be continuing on the date of such deposit or insofar as
Defaults or Events of Default from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 91st day after the date of
deposit; (v) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under any material agreement or
instrument (other than the Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound; (vi) the Company shall have delivered to the Trustee an opinion of
counsel to the effect that after the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; (vii) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders of New Notes over the other creditors of the Company
with the intent of defeating, hindering, delaying or defrauding creditors of the
Company or others; (viii) the Company shall have delivered to the Trustee an
opinion of counsel to the effect that the resulting trust will not be an
"investment company" (as that term is defined in the Investment Company Act of
1940, as amended), unless such trust is qualified under the Investment Company
Act of 1940 or exempt from regulation thereunder; and (ix) the Company shall
have delivered to the Trustee an Officers' Certificate and an opinion of
counsel, each stating that all conditions precedent provided for relating to the
Legal Defeasance or the Covenant Defeasance have been complied with.
TRANSFER AND EXCHANGE
A holder may transfer or exchange New Notes in accordance with procedures
described in "Description of the Notes -- Custody, Clearance and Settlement."
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Senior Note
accepted for redemption. Also, the Company is not required to transfer or
exchange any Note for a period of 15 days before a selection of Notes to be
redeemed.
The registered Holder of a Senior Note will be treated as the owner of it
for all purposes.
EXCHANGE OFFER; REGISTRATION RIGHTS
The Company and the Initial Purchasers entered into the Registration Rights
Agreement on March 18, 1998. Pursuant to the Registration Rights Agreement, the
Company agreed to file with the Commission within 90 days a registration
statement, including a prospectus (the "Exchange Offer Registration Statement")
on the appropriate form under the Securities Act with respect to an offer to
exchange each of the Old Notes for the Notes. The New Notes are expected to be
listed on the Luxembourg Stock Exchange. The prospectus and any other
information in connection with the Exchange Offer will be made available at the
office of the Luxembourg Agent. The New Notes will continue to be settled
through the book-entry facilities of the Euroclear Operator and Cedel, with a
new Common Code to be specified later. Upon the effectiveness of the Exchange
Offer Registration Statement, the Company will offer to the Holders of Transfer
Restricted Securities pursuant to the Exchange Offer who are able to make
certain representations the opportunity to exchange their Transfer Restricted
Securities for New Notes. If (i) the Company is not required to file the
Exchange Offer Registration Statement or permitted to consummate the Exchange
Offer because the Exchange Offer is not permitted by applicable law or
Commission policy or (ii) any holder of Transfer Restricted Securities notifies
the Company prior to the 20th day following consummation of the Exchange Offer
that (A) it is prohibited by law or Commission policy from participating in the
Exchange Offer or (B) that it may not resell the New Notes acquired by it in the
Exchange Offer to the public without delivering
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a prospectus and the prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales or (C) that it is a
broker-dealer and owns Old Notes acquired directly from the Company or an
affiliate of the Company, the Company will file with the Commission a Shelf
Registration Statement to cover resales of the Old Notes by the Holders thereof
who satisfy certain conditions relating to the provision of information in
connection with the Shelf Registration Statement. The Company will use its best
efforts to cause the applicable registration statement to be declared effective
as promptly as possible by the Commission. For purposes of the foregoing,
"Transfer Restricted Securities" means each Old Note until (i) the date on which
such Old Note has been exchanged by a person other than a broker-dealer for a
New Note in the Exchange Offer, (ii) following the exchange by a broker-dealer
in the Exchange Offer of an Old Note for a New Note, the date on which such New
Note is sold to a purchaser who receives from such broker-dealer on or prior to
the date of such sale a copy of the prospectus contained in the Exchange Offer
Registration Statement, (iii) the date on which such Old Note has been
effectively registered under the Securities Act and disposed of in accordance
with the Shelf Registration Statement or (iv) the date on which such Old Note is
distributed to the public pursuant to Rule 144 under the Act.
The Registration Rights Agreement provides that (i) the Company will file
an Exchange Offer Registration Statement with the Commission on or prior to 90
days after the Closing Date, (ii) the Company will use its best efforts to have
the Exchange Offer Registration Statement declared effective by the Commission
on or prior to 150 days after the Closing Date, (iii) unless the Exchange Offer
would not be permitted by applicable law or Commission policy, the Company will
commence the Exchange Offer and use its best efforts to issue on or prior to 30
business days after the date on which the Exchange Offer Registration Statement
was declared effective by the Commission, New Notes in exchange for all Old
Notes validly tendered prior thereto in the Exchange Offer and (iv) if obligated
to file the Shelf Registration Statement, the Company will use its best efforts
to file the Shelf Registration Statement with the Commission on or prior to 90
days after such filing obligation arises and to cause the Shelf Registration to
be declared effective by the Commission on or prior to 150 days after such
obligation arises. If (a) the Company fails to file any of the Registration
Statements required by the Registration Rights Agreement on or before the date
specified for such filing, (b) any of such Registration Statements is not
declared effective by the Commission on or prior to the date specified for such
effectiveness (the "Effectiveness Target Date"), or (c) the Company fails to
consummate the Exchange Offer within 30 business days of the Effectiveness
Target Date with respect to the Exchange Offer Registration Statement, or (d)
the Shelf Registration Statement or the Exchange Offer Registration Statement is
declared effective but thereafter ceases to be effective or usable in connection
with resales of Transfer Restricted Securities during the periods specified in
the Registration Rights Agreement (each such event referred to in clauses (a)
through (d) above a "Registration Default"), then the Company will pay
Liquidated Damages to each Holder of Old Notes as follows: the per annum
interest rate on the Old Notes will increase by 50 basis points, and the per
annum interest rate will increase by an additional 25 basis points for each
subsequent 90-day period during which the Registration Default remains uncured,
up to a maximum additional interest rate of 200 basis points per annum in excess
of the interest rate on the cover of this Prospectus. Notice of any increase in
interest rates, as well as any notice relating to the Exchange, will be made in
accordance with the procedures described under "General Listing Information
Notices." All accrued Liquidated Damages will be paid by the Company on each
Damages Payment Date to the Global Note Holder by wire transfer of immediately
available funds. Following the cure of all Registration Defaults, the accrual of
Liquidated Damages will cease.
Holders of Old Notes are required to make certain representations to the
Company (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and are required to deliver certain
information to be used in connection with the Shelf Registration Statement, if
any, and to provide comments on the Shelf Registration Statement within the time
periods set forth in the Registration Rights Agreement in order to have their
Old Notes included in the Shelf Registration Statement and benefit from the
provisions regarding Liquidated Damages set forth above.
Copies of the Registration Rights Agreement may be obtained at the office
of the Luxembourg Agent. All actions relating to the Exchange Offer may be
undertaken at the office of the Luxembourg Agent.
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Holders of Old Notes will be required to make certain representations to
the Company (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver information to
be used in connection with the Shelf Registration Statement and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Registration Rights Agreement in order to have such Old Notes included in
the Shelf Registration Statement and benefit from the provisions regarding
Liquidated Damages set forth in the preceding paragraph.
PAYMENT IN A COMPONENT CURRENCY
With respect to each due date for the payment of interest, premium, if any,
or Liquidated Damages, if any, or the repayment of principal on which the ECU is
neither used as the unit of account of the European Community nor used as the
currency of the European Union (and is not at such time replaced by the EURO),
the Company shall, without liability on its part and without having regard to
the interests of individual Holders (i) choose a component currency (the "Chosen
Currency") of the ECU or (ii) U.S. dollars in which all payments due on that
date with respect to New Notes shall be made. The amount of each payment in the
Chosen Currency shall be computed on the basis of the equivalent of the ECU in
that currency, determined as set forth herein, as of the fourth business day in
Luxembourg prior to the date on which such payment is due. Notice of the Chosen
Currency selected by the Company shall, where practicable, be given to Holders
of New Notes.
On the first business day in Luxembourg on which the ECU is neither used as
the unit of account of the EC nor used as the currency of the European Union
(and is not at such time replaced by the EURO), the Trustee shall, without
liability on its part and without having regard to the interests of individual
Holders of New Notes, choose the Chosen Currency in which all payments with
respect to New Notes having a due date prior thereto but not yet presented for
payment are to be made. The amount of each payment in the Chosen Currency shall
be computed on the basis of the equivalent of the ECU in that currency,
determined as set out in this paragraph, as of such first business day.
The equivalent of the ECU in the relevant Chosen Currency as of any date
(the "Day of Valuation") shall be determined on the following basis by the
Luxembourg Stock Exchange (the "Luxembourg Exchange"). The component currencies
of the ECU for this purpose (the "Components") shall be the currency amounts
which were components of the ECU when the ECU was most recently used as the unit
of account of the EC. The equivalent of the ECU in the Chosen Currency shall be
calculated by, first, aggregating the U.S. dollar equivalents of the Components,
and then, using the rate used for determining the U.S. dollar equivalent of the
Component in the Chosen Currency as set out below, calculating the equivalent in
the Chosen Currency of such aggregate amount in U.S. dollars.
The U.S. dollar equivalent of each of the Components shall be determined by
the Luxembourg Exchange on the basis of the middle spot delivery quotations
prevailing at 2:30 p.m. Luxembourg time on the Day of Valuation, as obtained by
the Trustee and notified by it to the Luxembourg Exchange from one or more
leading banks selected by the Trustee, in the country of issue of the Component
Currency in question.
If no direct quotations are available for a component currency as of a Day
of Valuation from any of the banks selected by the Trustee for this purpose
because foreign exchange markets are closed in the country of issue of that
currency or for any other reason, the most recent direct quotations for that
currency obtained by the Trustee and notified by it to the Luxembourg Exchange
shall be used in computing the equivalents of the ECU on such Day of Valuation,
provided, however, that such most recent quotations may be used only if they
were prevailing in the country of issue not more than two business days before
such Day of Valuation. Beyond such period of two business days, the Luxembourg
Exchange shall determine the U.S. dollar equivalent of such Component on the
basis of cross rates derived from the middle spot delivery quotations for such
component currency and for the U.S. dollar prevailing at 2:30 p.m. Luxembourg
time on such Day of Valuation, as obtained by the Trustee from one or more
leading banks, as selected by the Trustee (following consultation, if
practicable, with the Company) and notified to the Luxembourg Exchange, in a
country other than the country of issue of such component currency. Within such
period of two business days, the Luxembourg Exchange shall determine the U.S.
dollar equivalent of such Component on the basis of such
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cross rates if the Trustee judges that the equivalent so calculated is more
representative than the U.S. dollar equivalent calculated on the basis of such
most recent direct quotations. Unless otherwise specified by the Trustee, if
there is more than one market for dealing in any component currency by reason of
foreign exchange regulations or for any other reason, the market to be referred
to in respect of such currency shall be that upon which a non-resident issuer of
securities denominated in such currency would purchase such currency in order to
make payments in respect of such securities.
All determinations made by the Trustee or the Exchange shall be at its sole
discretion and shall, in the absence of manifest error, be conclusive for all
purposes and binding on the Company and all Holders.
All references to "ECU" are to the ECU referred to in Article 109g of the
Treaty and as defined in Council Regulation (EC) No. 3320/94, that is from time
to time used as the unit of account of the EC. Changes to the ECU may be made by
the EC, in which event the ECU will change accordingly.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next succeeding paragraphs, the Indenture or the
New Notes may be amended or supplemented with the consent of the Holders of at
least a majority in principal amount of the New Notes then outstanding
(including consents obtained in connection with a tender offer or exchange offer
for New Notes), and any existing default or compliance with any provision of the
Indenture or the New Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding New Notes (including
consents obtained in connection with a tender offer or exchange offer for New
Notes).
Without the consent of each Holder affected, an amendment or waiver may
not: (i) reduce the amount of New Notes whose Holders must consent to an
amendment, supplement or waiver, (ii) reduce the principal of or change the
fixed maturity of any Senior Note, (iii) reduce the rate of accretion on any
Senior Note, (iv) waive a Default or Event of Default in the payment of
principal of or premium, if any, on the New Notes (except a rescission of
acceleration of the New Notes by the Holders of at least a majority in aggregate
principal amount of the New Notes and a waiver of the payment default that
resulted from such acceleration), (v) make any New Note payable in money other
than that stated in the New Notes, (vi) make any change in the provisions of the
Indenture relating to waivers of past Defaults or the rights of Holders of New
Notes to receive payments or principal of or premium, if any, on the New Notes,
or (vii) make any change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of New
Notes, the Company and the Trustee may amend or supplement the Indenture or the
New Notes to cure any ambiguity, defect or inconsistency, to provide for
uncertificated New Notes in addition to or in place of certificated New Notes,
to provide for the assumption of the Company's obligations to Holders of the New
Notes in the case of a merger, consolidation or sale of all or substantially all
of the Company's assets, to make any change that would provide any additional
rights or benefits to the Holders of the New Notes or that does not adversely
affect the legal rights under the Indenture of any such Holder, or to comply
with requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign. The Chase Manhattan Bank is the Trustee under the Indenture relating
to the Convertible Notes.
The Holders of a majority in principal amount of the then outstanding New
Notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care
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of a prudent man in the conduct of his own affairs. Subject to such provisions,
the Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request of any Holder of New Notes, unless such
Holder shall have offered to the Trustee security and indemnity satisfactory to
it against any loss, liability or expense.
LISTING
The New Notes are expected to be listed on the Luxembourg Stock Exchange.
The legal notice relating to the issue of the New Notes and the Restated
Certificate of Incorporation of the Company have been registered with the
Registrar of the District Court in Luxembourg, where such documents are
available for inspection and where copies thereof can be obtained upon request.
In addition, as long as the New Notes are listed on the Luxembourg Stock
Exchange, an agent for making payments on, and transfers of, New Notes will be
maintained in Luxembourg. The Company has initially designated Banque
Internationale a Luxembourg S.A. as its agent for such purposes.
CUSTODY, CLEARANCE AND SETTLEMENT
The New Notes will be represented by a single global certificate in
registered form registered in the name of and deposited with the Common
Depositary for safekeeping.
Custody
Investors who hold accounts with the Euroclear Operator or Cedel may
acquire, hold and transfer security entitlements with respect to the New Notes
against the Euroclear Operator or Cedel and its respective property by
book-entry to accounts with the Euroclear Operator or Cedel, each of which has
an account with the Common Depositary. "Security entitlement" means the rights
and property interests of an accountholder against its securities intermediary
under applicable law in or with respect to a security, including any ownership,
co-ownership, contractual or other rights. Investors who do not have accounts
with the Euroclear Operator or Cedel may acquire, hold and transfer security
entitlements with respect to the New Notes against the securities intermediary
and its property with which such investors hold accounts by book-entry to
accounts with such securities intermediary, which in turn may hold a security
entitlement with respect to the New Notes through the Euroclear Operator or
Cedel.
Euroclear
The Euroclear Operator has advised the Company as follows: The Euroclear
Operator acts as an international CSD ("ICSD") located in Belgium, holding
securities and security entitlements with respect thereto in custody for
Euroclear Participants through accounts with an international network of
depositary banks and local CSDs, and facilitating the clearance and settlement
of securities transactions settled in any of more that 30 currencies, including
EUROs, among Euroclear Participants, and between Euroclear Participants and
holders of accounts with Cedel and certain other securities intermediaries,
through electronic book-entry changes in accounts of such participants or its
accounts with other securities intermediaries. Euroclear Participants include
banks, brokers, central banks and other professional investors and securities
intermediaries.
Cedel
Cedel has advised the Company as follows: Cedel acts as an ICSD located in
Luxembourg, holding securities and security entitlements with respect thereto in
custody for Cedel Participants through accounts with an international network of
depositary banks and local CSDs, and facilitating the clearance and settlement
of securities transactions settled in any of more than 30 currencies, including
EUROs, among Cedel Participants, and between Cedel Participants and holders of
accounts with the Euroclear Operator and certain other securities
intermediaries, through electronic book-entry changes in accounts of such
participants or its accounts with other securities intermediaries. Cedel
Participants include banks, brokers, central banks and other professional
investors and securities intermediaries.
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Disclaimer
Although the Euroclear Operator and Cedel have agreed to the Applicable
Procedures in order to facilitate the acquisition, holding and transfer of
security entitlements with respect to the New Notes, they are under no
obligation to perform or continue to perform such procedures and such procedures
may be modified or discontinued at any time. Neither the Company nor the Initial
Purchasers will have any responsibility for the nonperformance or misperformance
(as a result of insolvency, mistake, misconduct or otherwise) of the Euroclear
Operator, Cedel or any other securities intermediary through which an investor
may acquire, hold or transfer a security entitlement with respect to the New
Notes of such securities intermediary's obligations under the rules, procedures
or contractual provisions governing their operations.
Initial Distribution and Secondary Market
Investors electing to acquire security entitlements with respect to the New
Notes through an account with the Euroclear Operator or Cedel or some other
securities intermediary must follow the settlement procedures of its securities
intermediary with respect to the settlement of new issues of securities.
Security entitlement with respect to the New Notes to be acquired through an
account with the Euroclear Operator or Cedel will be credited to such account as
of the settlement date against payment in EURO (or ECU, as applicable) for value
as of the settlement date.
Investors electing to acquire, hold or transfer security entitlements with
respect to the New Notes through an account with the Euroclear Operator, Cedel
or some other securities intermediary other than in connection with the initial
distribution of the New Notes must follow the settlement procedures of its
securities intermediary with respect to the settlement of secondary market
transactions in securities.
REPLACEMENT NOTES
If any mutilated New Note is surrendered to the Trustee or the Company and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any New Note or, so long as the New Notes are listed on the Luxembourg
Stock Exchange, any such surrender or receipt is by means of the paying agent
whose principal office is in Luxembourg, the Company shall issue and the
Trustee, upon receipt of an Authentication Order, shall authenticate a
replacement New Note if the Trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a New Note is replaced. The Company may charge for its
expenses in replacing a New Note.
UNCLAIMED MONEY, PRESCRIPTION
If money deposited with the Trustee or Paying Agent for the payment of
principal or interest remains unclaimed for two years, the Trustee and the
Paying Agent shall pay the money back to the Company at its written request.
After that time, holders of New Notes entitled to the money must look to the
Company for payment unless an abandoned property law designates another person
and all liability of the Trustee and such Paying Agent shall cease. Other than
as set forth in this paragraph, the Indenture does not provide for any
prescription period for the payment of interest and principal on the New Notes.
TAXATION
Payments by the Company to the Paying Agent of principal and or interest on
the New Notes shall be made without deduction for and free of any taxes, duties,
fees or other charges levied on the Company in respect of the New Notes by the
European Community or any Member State thereof or any political subdivision or
taxing authority therein or thereof. Payments to the holders of the New Notes
will be subject in all cases to any fiscal or other laws and regulations
applicable thereto.
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NOTICES
All notices shall be deemed to have been given upon (i) the mailing by
first class mail, postage prepaid, of such notices to Holders of the New Notes
at their registered addresses as recorded in the Register; and (ii) so long as
the New Notes are listed on the Luxembourg Stock Exchange and it is required by
the rules of the Luxembourg Stock Exchange, publication of such notice to the
Holders of the New Notes in English in a leading newspaper having general
circulation in Luxembourg (which is expected to be the Luxembourg Wort) or, if
such publication is not practicable, in one other leading English language daily
newspaper with general circulation in Europe, such newspaper being published on
each Business Day in morning editions, whether or not it shall be published in
Saturday, Sunday or holiday editions.
GOVERNING LAW AND JUDGMENTS
The New Notes and the Indenture will be governed exclusively by the laws of
the State of New York. Under the Judiciary Law of the State of New York, a
judgment or decree in an action based upon an obligation denominated in a
currency other than U.S. dollars will be rendered in the foreign currency of the
underlying obligation and converted into U.S. dollars at a rate of exchange
prevailing on the date of the entry of the judgment or decree.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a complete definition of all such terms, as well as
any other capitalized terms used herein for which no definition is provided.
"Accreted Value" means, as of any date of determination, the sum of (a) the
initial offering price to the public of each New Note and (b) the portion of the
excess of the principal amount at maturity of each Senior Note over such initial
public offering price that shall have been amortized through such date, such
amount to be so amortized on a daily basis and compounded semi-annually on each
April 1 and October 1 at the rate of 9 1/2% per annum from the date of issuance
of the New Notes through the date of determination. The Accreted Value of any
New Note on or after the Full Accretion Date shall be equal to 100% of its
stated principal amount at maturity.
"Acquired Debt" means, with respect to any specified Person: (i)
Indebtedness of any other Person existing at the time such other Person merged
with or into or became a Restricted Subsidiary of such specified Person,
including Indebtedness incurred in connection with, or in contemplation of, such
other Person merging with or into or becoming a Subsidiary of such specified
Person and (ii) Indebtedness encumbering any asset acquired by such specified
Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
that (i) holding office as an executive officer or director of a Person or (ii)
beneficial ownership of 10% or more of the equity securities of a Person, either
individually or as part of a group, shall be deemed to be control.
"Asset Sale" means the sale, lease, conveyance or other disposition of any
assets outside the normal course of business other than a sale of Cash
Equivalents for cash (including, without limitation, by way of a Sale/Leaseback
Transaction), whether in a single transaction or a series of related
transactions, (a) that have a fair market value in excess of $250,000, or (b)
for net proceeds in excess of $250,000. Notwithstanding the foregoing, the
following will not be deemed to be Asset Sales: (i) a transfer of assets by the
Company to a Wholly Owned Restricted Subsidiary of the Company or by a Wholly
Owned Restricted Subsidiary of the Company to the Company or to another Wholly
Owned Restricted Subsidiary of the Company and (ii) the exchange by the Company
or a Restricted Subsidiary of the Company of assets (other than direct or
indirect
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interests in Omnitel or OPI) for interests in a Related Business if the Company
receives an opinion from an investment banking firm of national standing with
experience in evaluating transactions similar to such transaction that such
exchange is fair to the Company from a financial point of view and the Company's
Board of Directors determines that such exchange is in the best interests of the
Company; provided that the sale, lease, conveyance or other disposition of all
or substantially all of the assets of the Company will be governed by the
provisions of the Indenture described above under the caption "Change of
Control" and/or the provisions described above under the caption "Merger,
Consolidation or Sale of Assets" and not by the provisions of the Asset Sale
covenant.
"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at
the time of determination, the present value (discounted at the interest rate
borne by the New Notes) of the total obligations of the lessee for rental
payments during the remaining term of the lease included in such Sale/Leaseback
Transaction (including any period for which such lease has been extended).
"Basket Investments" has the meaning specified in the definition of
Permitted Investments.
"Business Day" means each day which is not a legal holiday in any of
London, New York and Luxembourg.
"Capital Lease Obligations" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on the balance sheet in accordance
with GAAP.
"Capital Stock" means any and all shares, interests, participations, rights
or other equivalents (however designated) of corporate stock or similar
interests in any other form of entity, including, without limitation, with
respect to partnerships, partnership interests (whether general or limited) and
any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distribution of assets of, such
partnership.
"Cash Equivalents" means, with respect to any Person, (i) U.S. dollars,
(ii) other currencies in an amount not to exceed the amount of Indebtedness or
contractual obligations of such Person to be incurred in those currencies not
otherwise "hedged" through Hedging Obligations, (iii) Government Securities,
(iv) certificates of deposit and Eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each case
with any domestic commercial bank having capital and surplus in excess of $500
million and a Keefe Bank Watch Rating of "B" or better, (v) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clauses (iii) and (iv) entered into with any financial
institution meeting the qualifications specified in clause (iv) above and (vi)
commercial paper having the highest rating obtainable from Moody's Investors
Service, Inc. or Standard & Poor's Corporation and in each case maturing within
six months after the date or acquisition, provided, that with respect to any
Non-Domestic Person, Cash Equivalents shall also mean those investments that are
comparable to clauses (iv) through (vi) above in such Person's country of
organization or country where it conducts business operations.
"Closing Price" means, on any Trading Day with respect to any share of
Capital Stock, the last reported sale price regular way for a share of such
Capital Stock or, in case no such reported sale takes place on such day, the
reported closing bid price regular way, in either case on the New York Stock
Exchange or, if such shares of Capital Stock are not listed or admitted to
trading on such Exchange, on the principal national securities exchange on which
such shares are listed or admitted to trading or, if not listed or admitted to
trading on any national securities exchange, on The Nasdaq Stock Market National
Market or, if such shares are not listed or admitted to trading on any national
securities exchange or quoted on such Market but the issuer is a "Foreign
Issuer" (as defined in Rule 3b-4(b) under the Exchange Act) and the principal
securities exchange on which such shares are listed or admitted to trading is a
"Designated Offshore Securities Market" (as defined in Rule 902(a) under the
Securities Act), the reported closing bid price regular way on such principal
exchange, or, if such shares are not listed or admitted to trading on any
national securities exchange or quoted on such automated quotation system and
the issuer and principal securities exchange do not meet
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such requirements, the closing bid price in the over-the-counter market as
furnished by any New York Stock Exchange member firm that is selected from time
to time by the Company for that purpose and is reasonably acceptable to the
Trustee.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (a) an amount
equal to any extraordinary loss of such Person or any of its Restricted
Subsidiaries plus any net loss realized in connection with an Asset Sale by such
Person or any of its Restricted Subsidiaries (to the extent such losses were
deducted in computing such Consolidated Net Income), plus (b) provision for
taxes based on income or profits of such Person and its Restricted Subsidiaries
for such period, to the extent such provision for taxes was included in
computing Consolidated Net Income, plus (c) consolidated interest expense of
such Person and its Restricted Subsidiaries for such period, whether paid or
accrued (including amortization of original issue discount, noncash interest
payments and the interest component of any payments associated with Capital
Lease Obligations and net payments (if any) pursuant to Hedging Obligations), to
the extent such expense was deducted in computing Consolidated Net Income, plus
(d) depreciation and amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) of such Person and its Restricted Subsidiaries for such
period to the extent such depreciation and amortization were deducted in
computing Consolidated Net Income and minus (e) any non-cash items that increase
Net Income, in each case, on a consolidated basis and determined in accordance
with GAAP. Notwithstanding the foregoing, any item set forth in clauses (a)
through (d) of the preceding sentence shall be added to Consolidated Net Income
to compute Consolidated Cash Flow of such Person only to the extent (and in the
same proportion) that the Net Income of such Subsidiary was included in
calculating the Consolidated Net Income of such Person and only if a
corresponding amount would be permitted at the date of determination to be
dividended to such Person by such Subsidiary without prior approval (that has
not been obtained), pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders. In addition, for
purposes of computing Consolidated Cash Flow, (i) acquisitions that have been
made by the Company or any of its Restricted Subsidiaries, including all mergers
and consolidations and including any related financing transactions, during the
most recently completed four full fiscal quarters for which financial statements
are available or subsequent to such four-quarter reference period and on or
prior to the date on which the calculation of the Consolidated Cash Flow is made
(the "Calculation Date") shall be deemed to have occurred on the first day of
the four-quarter reference period, and (ii) the Consolidated Cash Flow
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of on or prior to the Calculation Date,
shall be excluded.
"Consolidated Debt" means, with respect to any Person as of any date of
determination, the aggregate amount of Indebtedness and Disqualified Stock of
such Person and its Restricted Subsidiaries outstanding as of such date of
determination, determined on a consolidated basis in accordance with GAAP (but
excluding Indebtedness of Unrestricted Subsidiaries or Unrestricted Affiliates,
whether or not such Subsidiaries or Affiliates would be consolidated in
accordance with GAAP), provided, that, for purposes of calculating the Company's
Consolidated Debt as a percentage of the Company's Total Market Capitalization,
all Project Financing of the Company's Restricted Subsidiaries that has not been
Guaranteed by the Company shall be excluded in calculating the amount of such
Consolidated Debt and the amount of such Total Market Capitalization.
"Consolidated Debt to Consolidated Cash Flow Ratio" means, as at any date
of determination, the ratio of the Consolidated Debt of the Company as of such
date to the Consolidated Cash Flow of the Company for the most recently
completed four full fiscal quarters for which internal financial statements are
available as of such date of determination.
"Consolidated Invested Equity Capital" means, with respect to any Person as
of any date, the sum of the Invested Equity Capital of such Person as of such
date and, without duplication, the Invested Equity Capital of each of its
Restricted Subsidiaries and Restricted Affiliates (and their Restricted
Subsidiaries) as of such date. For purposes of calculating the Consolidated
Invested Equity Capital of any Person as of any date, in order to avoid
duplication, the Invested Equity Capital of a Restricted Subsidiary or
Restricted Affiliate (or
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their Restricted Subsidiaries) of such Person shall not include any amounts that
would be included in the Consolidated Invested Equity Capital of any equity
owner of such Restricted Subsidiary or Restricted Affiliate, to the extent that
such amounts were utilized by such equity owner prior to such date to permit the
incurrence of Project Financing pursuant to clause (f) of the second paragraph
of the covenant entitled "Incurrence of Indebtedness and Issuance of
Disqualified Stock." For example, if a direct Restricted Subsidiary of the
Company has Consolidated Invested Equity Capital of $100 and incurs $200 of
Project Financing, then a direct or indirect Restricted Subsidiary (or a
Restricted Affiliate) of such first Restricted Subsidiary will not be deemed to
have any Invested Equity Capital based on contributions or loans to it by such
first Restricted Subsidiary. In addition, the Invested Equity Capital of a
Restricted Subsidiary or Restricted Affiliate of a Person will never be
considered to be greater than the Invested Equity Capital of such Person, except
as a result of contributions of Invested Equity Capital to such Restricted
Subsidiary or Restricted Affiliate by third parties.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided, that (i) the Net Income of any Person that is not a Restricted
Subsidiary or that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions paid in
cash to such Person or a Wholly Owned Restricted Subsidiary thereof; (ii) the
Net Income of any Person acquired in a pooling of interests transaction for any
period prior to the date of such acquisition shall be excluded; (iii) the
cumulative effect of a change in accounting principles shall be excluded, and
(iv) the Net Income of any Unrestricted Subsidiary of such Person shall be
excluded, whether or not distributed to such Person or one of its Subsidiaries.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its consolidated Restricted Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified Stock).
"Credit Facility" means one or more credit facilities (whether a term or a
revolving facility) of the type customarily entered into with banks, between the
Company or any of its Restricted Subsidiaries, Restricted Affiliates or
Restricted Subsidiaries of Restricted Affiliates, and any banks or other lenders
(and any renewals, refundings, extension or replacements of any such credit
facilities).
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement as to which such
Person is a party or a beneficiary.
"Damages Payment Date" means, in connection with the payment of Liquidated
Damages, each April 1 and October 1.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is or could be
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the Holder thereof, in whole or in part, on or prior
to the maturity of the New Notes.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Offering Proceeds" means the aggregate amount of cash proceeds (in
U.S. dollars or the equivalent value in one or more foreign currencies) received
by the Company from a public or private offering of Equity Interests of the
Company (other than Disqualified Stock and other than Equity Interests sold to a
Subsidiary of the Company) or of debt securities convertible or exchangeable
into Equity Interests of the Company (but only after and to the extent they have
been so converted or exchanged), net of any expenses or underwriting commission
incurred by the Company in connection with such offering.
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"Existing Indebtedness" means Indebtedness of the Company and its
Restricted Subsidiaries in existence on the date of the Indenture until such
amounts are repaid.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession in the United States, which are in effect on the date of the
Indenture.
"Government Securities" means securities that are (a) direct obligations of
the United States of America, United Kingdom, Italy or Germany, for the timely
payment of which their full faith and credit is pledged or (b) obligations of a
person controlled or supervised by and acting as an agency or instrumentality of
the United States of America, United Kingdom, Italy or Germany, the timely
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, United Kingdom, Italy or Germany,
which, in either case, are not callable or redeemable at the option of the
issuer thereof, and shall also include a depository receipt issued by a bank (as
defined in Section 3(a)(2) of the Securities Act), as custodian with respect to
any such Government Security or a specific payment of principal of or interest
on any such Government Security held by such custodian for the account of the
holder of such depository receipt; provided, that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Security or the specific payment of
principal of or interest on the Government Security evidenced by such depository
receipt.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness. The amount of any Guarantee shall be equal to the maximum
potential liability in respect of the Guarantee, even if less than the
Indebtedness supported by such Guarantee.
"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement.
"Implied POP Senior Indebtedness" means, as of any time of determination,
the product of (a) $40.00 multiplied by (b) 58,000,000 multiplied by (c) the
Percentage Interest in OPI as of such time.
"Implied POP Subordinated Indebtedness" means, as of any time of
determination, the product of (a) $12.50 multiplied by (b) 58,000,000 multiplied
by (c) the Percentage Interest in OPI as of such time.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium (if any)
in respect of (A) indebtedness of such Person for money borrowed and (B)
indebtedness evidenced by notes, debentures, bonds or other similar instruments
for the payment of which such Person is responsible or liable; (ii) all Capital
Lease Obligations of such Person and all Attributable Debt in respect of
Sale/Leaseback Transactions entered into by such Person; (iii) all obligations
of such Person issued or assumed as the deferred purchase price of property, all
conditional sale obligations of such Person and all obligations of such Person
under any title retention agreement (but excluding trade accounts payable
arising in the ordinary course of business); (iv) all obligations of such Person
for the reimbursement of any obligor on any letter of credit, banker's
acceptance or similar credit transaction (other than obligations with respect to
letters of credit securing obligations (other than obligations described in (i)
through (iii) above) entered into in the ordinary course of business of such
Person to the extent such letters of credit are not drawn upon or, if and to the
extent drawn upon, such drawing is reimbursed no later than the third business
day following receipt by such Person of a demand for reimbursement following
payment on the letter of credit); (v) the amount of all obligations of such
Person with respect to the redemption, repayment or other repurchase of any
Disqualified Stock; (vi) all obligations of the type referred to in clauses (i)
through (v) of other Persons and all dividends of other Persons for the payment
of which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
Guarantee; (vii) all obligations of the type referred to in clauses (i) through
(vi) of
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other Persons secured by any Lien on any property or asset of such Person
(whether or not such obligation is assumed by such Person, but excluding
Non-Recourse Pledges in connection with Project Financings), the amount of such
obligation being deemed to be the lesser of the value of such property or assets
or the amount of the obligation so secured and (viii) to the extent not
otherwise included in this definition, Hedging Obligations of such Person,
provided that each of the foregoing, where applicable, shall be calculated in
accordance with US GAAP. The amount of Indebtedness of any Person at any date
shall be the outstanding balance at such date of all unconditional obligations
as described above and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations at such
date.
"Interest Rate Agreement" means any interest rate swap agreement, interest
rate cap agreement or other financial agreement or arrangement designed to
protect the Company or any Restricted Subsidiary against fluctuations in
interest rates.
"Invested Equity Capital" means, with respect to any Person as of any date,
the sum of (i) the total dollar amount contributed in cash plus the value of all
property contributed (valued at the lower of fair market value at the time of
contribution, determined in good faith by the Company's Board of Directors, or
the book value of such property at the time of contribution on the books of the
Person making such contribution) to such Person since the date of its creation
in the form of common equity, plus, without duplication, (ii) the total dollar
amount contributed in cash plus the value of all property contributed (valued at
the lower of fair market value at the time of contribution, determined in good
faith by the Company's Board of Directors, or the book value of such property at
the time of contribution on the books of the Person making such contribution) to
such Person since the date of its creation by the Company or a Wholly Owned
Restricted Subsidiary of the Company in consideration of the issuance of
preferred equity or Indebtedness, less (iii) the fair market value of all
interest, dividends and other distributions (in whatever form and however
designated) made by such Person since the date of its creation to the holders of
its common equity (and their Affiliates), provided that in no event shall the
aggregate amount of interest, dividends and other distributions made to any
holder of common equity of a Person (or its Affiliates) operate to reduce the
Invested Equity Capital of such Person by more than the total contributions to
such Person (per clauses (i) and (ii) above) by such equity holder (and its
Affiliates), and less (iv) the total amount of Basket Investments (measured as
of the date made but without giving effect to any proration) made by such Person
or any of its Restricted Subsidiaries or Restricted Affiliates since the date of
the Indenture that are outstanding as of such date.
"Investment" means, with respect to any Person, any investment by such
Person in other Persons (including Affiliates of such Person) in the form of
loans (including Guarantees), advances (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
capital contributions, purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities, and all other items that are
or would be classified as investments on a balance sheet prepared in accordance
with GAAP. Except as otherwise specified, Investments will be valued as of the
date made for all purposes under the Indenture.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Minority Owned Affiliate" of any specified Person means any other Person
in which an Investment has been made by the specified Person other than a direct
or indirect Subsidiary of the specified Person.
"Moody's" means Moody's Investors Service, Inc. or, if Moody's Investors
Service, Inc. shall cease rating debt securities having a maturity at original
issuance of at least one year and such ratings businesses shall have been
transferred to a successor Person, such successor Person; provided, that if
Moody's Investors Service, Inc. ceases rating debt securities having a maturity
at original issuance of at least one year and its rating business with respect
thereto shall not have been transferred to any successor Person, then "Moody's"
shall mean any other nationally recognized rating agency (other than S&P) that
rates debt securities having a
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maturity at original issuance of at least one year and that shall have been
designated by the Company by a written notice given to the Trustee.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to Sale/Leaseback Transactions), or (b) the
disposition of any securities or the extinguishment of any Indebtedness of such
Person or any of its Restricted Subsidiaries, and (ii) any extraordinary gain
(but not loss), together with any related provision for taxes on such
extraordinary gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale, net of the
direct costs relating to such Asset Sale (including, without limitation,
reasonable legal, accounting and investment banking fees, and sales commissions)
and any relocation expenses incurred as a result thereof, taxes paid or payable
as a result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness secured by a Lien on the asset or assets that are
the subject of such Asset Sale (other than intercompany Indebtedness and
subordinated Indebtedness) and any reserve for adjustment in respect of the sale
price of such asset or assets, provided that amounts in such reserve must be
established in accordance with GAAP and shall constitute Net Proceeds as and
when released to the Company or its Restricted Subsidiaries.
"Non-Domestic Person" means any direct or indirect Subsidiary or Minority
Owned Affiliate of the Company that is organized under the laws of any
jurisdiction, or has its principal business operations, outside of the United
States of America and Puerto Rico.
"Non-Recourse Debt" means, with respect to any Person, Indebtedness or that
portion of Indebtedness (a) as to which the specified Person (i) does not
provide credit support of any kind (including, without limitation, pursuant to
any undertaking, agreement or instrument that would constitute Indebtedness),
(ii) is not directly or indirectly liable (as a guarantor or otherwise), and
(iii) does not constitute the lender; and (b) no default with respect to which
would permit (upon notice, lapse of time or both) any holder of such
Indebtedness to take any action against the specified Person or its Restricted
Subsidiaries or would permit any holder of Indebtedness of the specified Person
or its Restricted Subsidiaries to declare a default on such other Indebtedness
or cause the payment thereof to be accelerated or payable prior to its stated
maturity; and (c) as to which the lenders have been notified in writing that
they will not have any recourse to the stock or assets of the specified Person
or its Restricted Subsidiaries.
"Non-Recourse Pledge" means, with respect to any Project Financing
permitted under the Indenture by any Person that owns the assets or business
being financed (the "borrower"), a pledge by the immediate parent of the
borrower of the Equity Interests of the borrower to secure such Project
Financing; provided that (i) the lenders' recourse shall be limited to the
Equity Interests of the borrower and shall not extend to any other assets of the
parent and (ii) the assets or business being financed shall constitute all or
substantially all the assets of the borrower.
"NTL" means NTL Incorporated, a Delaware corporation.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Omnitel" means Omnitel-Sistemi Radiocellulari Italiani S.p.A., and any
successors.
"OPI" means Omnitel Pronto Italia S.p.A., and any successors.
"Permitted Holder" means and includes (i) any corporation the outstanding
voting power of the capital stock of which is beneficially owned directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of the voting power of the Capital Stock of the
Company or (ii) any underwriter during the period engaged in a firm commitment
underwriting on behalf of the Company with respect to the shares of Capital
Stock being underwritten.
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"Percentage Interest in OPI" means, as of any time of determination, the
ratio (expressed as a decimal carried out to four decimal places) of the total
outstanding Capital Stock of OPI beneficially owned directly or indirectly
(through one or more Persons) at such time by the Company and/or any of its
Restricted Subsidiaries, Restricted Affiliates and/or Restricted Subsidiaries of
its Restricted Affiliates, determined on a pro forma basis after giving effect
to any transaction (or series of related transactions) involving the acquisition
by the Company and/or any of its Restricted Subsidiaries, Restricted Affiliates
and/or Restricted Subsidiaries of its Restricted Affiliates, directly or
indirectly (through one or more Persons), of Capital Stock of OPI, whether such
transaction is the subject of a definitive agreement, containing customary
closing conditions, or is otherwise probable to occur.
"Permitted Investments" means (a) Investments in Cash Equivalents; (b)
Investments by the Company or any Restricted Subsidiary of the Company in the
Company or in a Restricted Subsidiary of the Company that is primarily engaged
in a Related Business; (c) Investments by the Company or any Restricted
Subsidiary of the Company in a Person, if as a result of such Investment (i)
such Person becomes a Restricted Subsidiary of the Company that is engaged in a
Related Business or (ii) such Person is merged, consolidated or amalgamated
into, or transfers or conveys all or substantially all of its assets to, or is
liquidated into, the Company or a Restricted Subsidiary of the Company that is
engaged in a Related Business; (d) Investments by the Company or any of its
Restricted Subsidiaries in any Minority Owned Affiliate that has been properly
designated as a Restricted Affiliate and that is primarily engaged in a Related
Business, provided that any such Investment shall cease to be a Permitted
Investment pursuant to this clause (d) if such Restricted Affiliate fails to
observe after any applicable notice period any of the provisions of the
covenants that are applicable to such Restricted Affiliate; (e) Investments by
the Company or a Restricted Subsidiary of the Company in Equity Interests of
Unrestricted Subsidiaries or Unrestricted Affiliates or in the form of
Guarantees by the Company or a Restricted Subsidiary of the Company of
obligations of Unrestricted Subsidiaries or Unrestricted Affiliates
(collectively, together with all Unrestricted Investments, "Basket
Investments"), in each case only to the extent that such Investments are in, or
such Guarantees are of obligations of, Persons that are primarily engaged in
Related Businesses, provided that the aggregate amount of all Basket Investments
at any one time outstanding (measured by the fair market value of each such
Investment at the time made, as determined in good faith by the Company's Board
of Directors or, in the case of a Guarantee, the amount guaranteed) may not
exceed the sum of (i) $40 million, plus (ii) the aggregate New Equity Offering
Proceeds received by the Company since the date of the Indenture and not
otherwise applied to Restricted Payments, plus (iii) the aggregate net cash
proceeds from sales of Subordinated Indebtedness of the Company received by the
Company since the date of the Indenture and not otherwise applied to Restricted
Payments, plus (iv) to the extent that any Investment pursuant to this clause
(e) was made in an Unrestricted Subsidiary or Unrestricted Affiliate since the
date of the Indenture and is sold for cash or otherwise liquidated for cash, the
lesser of (1) the return of capital with respect to such Investment in cash
(less the cost of disposition) and (2) the initial amount of such Investment,
plus (v) to the extent that any Unrestricted Subsidiary is properly designated
as a Restricted Subsidiary in accordance with the terms of the Indenture, or to
the extent that any Unrestricted Affiliate is properly designated as a
Restricted Affiliate in accordance with the terms of the Indenture, the lesser
of (1) the initial amount of all Investments made since the date of the
Indenture in such Unrestricted Subsidiary or Unrestricted Affiliate and (2) the
fair market value of all such Investments as of the date of such designation;
(f) Investments in the form of Non-Recourse Pledges in connection with Project
Financings; (g) all Investments that were outstanding on, or committed to prior
to, the date of the Indenture; (h) Investments by the Company or a Restricted
Subsidiary in Omnitel or OPI; (i) Hedging Obligations entered into by the
Company or any of its Restricted Subsidiaries, Restricted Affiliates or
Restricted Subsidiaries of a Restricted Affiliate, for bona fide business
reasons and not for speculative purposes, and otherwise in compliance with the
Indenture; (j) Investments received by the Company or its Restricted
Subsidiaries, Restricted Affiliates or Restricted Subsidiaries of Restricted
Affiliates, as consideration for asset sales, including Asset Sales; provided in
the case of an Asset Sale, (A) such investment does not exceed 15% of the
consideration received for such Asset Sale and (B) such Asset Sale is otherwise
effected in compliance with the "Asset Sales" covenant; (k) additional
Investments having an aggregate fair market value, taken together with all other
Investments made pursuant to this clause (k) that are at the time outstanding,
not exceeding $5 million at the time of such Investment (with the fair
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market value of each Investment being measured at the time made and without
giving effect to subsequent changes in value), and (m) that portion of any
Investment where the consideration provided by the Company is Capital Stock of
the Company (other than Disqualified Stock). For purposes of the foregoing
clause (e), only the Company's Pro Rata Portion of any Basket Investment will be
counted in determining the amount of Basket Investments outstanding at any time
or proposed to be made. In the event of any change in the Company's Pro Rata
Portion of any Basket Investment, such calculation shall be recomputed as of the
date of such change.
"Permitted Liens" means (a) Liens in favor of the Company or a Wholly Owned
Restricted Subsidiary of the Company; (b) Liens on property of a Person existing
at the time such Person is merged into or consolidated with the Company or any
Restricted Subsidiary of the Company, provided that such Liens were in existence
prior to the contemplation by the Company of such merger or consolidation and do
not extend to any assets other that those of the Person merged into or
consolidated with the Company; (c) Liens on property existing at the time of
acquisition thereof by the Company or any Restricted Subsidiary of the Company,
provided that such Liens were in existence prior to or put in place in the
contemplation of such acquisition; (d) Liens to secure the performance of
statutory obligations, surety or appeal bounds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business; (e)
Liens existing on the date of the Indenture; (f) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded, provided that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefor; (g)
Liens incurred in the ordinary course of business of the Company or any
Restricted Subsidiary of the Company with respect to obligations that do not
exceed $5.0 million at any one time outstanding and that (A) are not incurred in
connection with the borrowing of money or the obtaining of advances or credit
(other than trade or installment credit in the ordinary course of business) and
(B) do not in the aggregate materially detract from the value of the property or
materially impair the use thereof in the operation of business by the Company or
such Restricted Subsidiary; (h) Liens on assets of Restricted Subsidiaries
securing Project Financing that is permitted by the Indenture to be incurred;
(i) Liens in the form of Non-Recourse Pledges in connection with Project
Financings; (j) Liens securing obligations under any Credit Facility permitted
to be incurred under "Incurrence of Indebtedness and Issuance of Disqualifying
Stock", provided, that such Liens are not on the Company's direct interest in
Omnitel; (k) Liens securing Purchase Money Debt permitted to be incurred under
"Incurrence of Indebtedness and Issuance of Disqualifying Stock."
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company,
a Restricted Subsidiary of the Company, a Restricted Affiliate or a Restricted
Subsidiary of a Restricted Affiliate issued in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of the Company, a Restricted Subsidiary of the Company, a
Restricted Affiliate or a Restricted Subsidiary of a Restricted Affiliate;
provided that, unless such Indebtedness is being incurred to substantially
concurrently repay the New Notes in full at maturity: (1) the principal amount
(or Accreted Value, as applicable) of such Indebtedness does not exceed the
principal amount (or Accreted Value, as applicable) of the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus the amount
of reasonable expenses incurred in connection therewith); (2) such Indebtedness
has a Weighted Average Life to Maturity equal to or greater than the Weighted
Average Life to Maturity of the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded; (3) if the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded is Subordinated
Indebtedness, then such Indebtedness is Subordinated Indebtedness; and (4) such
Indebtedness is incurred by the Company or the Restricted Affiliate (or
Subsidiary thereof) which is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"Pro Rata Portion" means, when applied to the Company for purposes of
determining the amount of Net Proceeds from an Asset Sale made by a Restricted
Subsidiary (other than a Wholly Owned Restricted
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Subsidiary) that constitute Excess Proceeds or for purposes of determining the
amount of an Investment that will be deemed to be outstanding under a particular
covenant or definition, that portion of such Net Proceeds or Investment as
corresponds to the Company's direct or indirect percentage ownership interest in
the profits of the Person who engaged in the Asset Sale or the Person in whom
the Investment was made, as applicable (which would be 100% in the case of any
Investments made by the Company directly). The Pro Rata Portion of the Net
Proceeds from an Asset Sale shall be determined in good faith by the Company's
Board of Directors in connection with such Asset Sale. The Pro Rata Portion of
an Investment as of any date shall be determined in good faith either by the
Company's Board of Directors or in accordance with procedures established as to
such Investment by the Company's Board of Directors.
"Project Financing" means any Indebtedness incurred after the date of the
Indenture by a Restricted Subsidiary of the Company, a Restricted Affiliate or a
Restricted Subsidiary of a Restricted Affiliate that is Non-Recourse Debt with
respect to the Company and each of its other Restricted Subsidiaries, Restricted
Affiliates and Restricted Subsidiaries of Restricted Affiliates, provided that
Guarantees permitted under (i) or (j) of "Incurrence of Indebtedness and
Issuance of Disqualified Stock" will not cause such Project Financing to be
recourse debt for purposes of this definition.
"Purchase Money Debt" means Indebtedness incurred to finance the
acquisition, construction or improvement of any property or business (including
Indebtedness incurred within 180 days following such acquisition, construction
or improvement), including Indebtedness of a Person existing at the time such
Person becomes a Restricted Subsidiary of the Company, Restricted Affiliate or
Restricted Subsidiary of a Restricted Affiliate or assumed by the Company or a
Restricted Subsidiary of the Company, Restricted Affiliate or Restricted
Subsidiary of a Restricted Affiliate in connection with the acquisition of
assets from such Person.
"Related Business" means any business in which the Company, its
Subsidiaries or Minority Owned Affiliates are engaged, directly or indirectly,
that consist primarily of, or are related to, operating, acquiring, developing
and constructing any telecommunications services and related services.
"Repurchase Offer" means an Asset Sale Offer or a Change of Control Offer,
as applicable.
"Restricted Affiliate" means any direct or indirect Minority Owned
Affiliate of the Company that has been designated in a Board Resolution as a
Restricted Affiliate based on a determination by the Board of Directors that the
Company has, directly or indirectly, the requisite control over such Minority
Owned Affiliate to prevent it from incurring any Indebtedness or issuing any
preferred stock or taking any other action at any time in contravention of any
of the provisions of the Indenture that are applicable to Restricted Affiliates.
The Company will be required to deliver an Officers' Certificate to the Trustee,
including a copy of the Board Resolution, upon designating any Minority Owned
Affiliate as a Restricted Affiliate.
"Restricted Subsidiary" of any such Person means any Subsidiary of such
Person other than an Unrestricted Subsidiary of such Person.
"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired whereby the Company or a Restricted Subsidiary
transfers such property to a Person and the Company or a Restricted Subsidiary
leases it from such Person, other than leases between the Company and a Wholly
Owned Restricted Subsidiary or between Wholly Owned Restricted Subsidiaries.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.
"S&P" means Standard & Poor's Corporation or, if Standard & Poor's
Corporation shall cease rating debt securities having a maturity at original
issuance of at least one year and such ratings business shall have been
transferred to a successor Person, such successor Person; provided, that if
Standard & Poor's Corporation ceases rating debt securities having a maturity at
original issuance of at least one year and its rating business with respect
thereto shall not have been transferred to any successor Person, then "S&P"
shall mean any other nationally recognized rating agency (other than Moody's)
that rates debt securities having a maturity at
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original issuance of at least one year and that shall have been designated by
the Company by a written notice given to the Trustee.
"Subordinated Indebtedness" means (i) the Convertible Notes and (ii) any
other Indebtedness of the Company that by its terms is expressly subordinated in
right of payment to the New Notes and that does not provide for any scheduled
principal payment or redemption prior to the first anniversary of the maturity
of the New Notes.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity (other than a partnership) of which more
than 50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person or a combination thereof and (ii) any partnership of which more
than 50% of the partnership's capital accounts, distribution rights or general
or limited partnership interests are owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person or a combination thereof.
"Total Market Capitalization" of any Person means, as of any date of
determination, the sum of (1) the Consolidated Debt of such Person on such date,
plus (2) the Total Market Value of Equity of such Person on such date.
"Total Market Value of Equity" of any Person means, as of any date of
determination, the sum of (1) the product of (i) the aggregate number of
outstanding primary shares of common stock of such Person and (ii) the average
Closing Price of such common stock over the 20 consecutive Trading Days
immediately preceding such date of determination, plus (2) the stated
liquidation preference of any outstanding shares of preferred stock of such
Person outstanding as of such date of determination. If no such Closing Price
exists with respect to any class of common stock, the value of such shares for
purposes of clause (1) of the proceeding sentence will be determined by a
valuation opinion issued by an investment banking firm of national standing with
experience in such valuations that has been filed with the Trustee.
"Trading Day" with respect to a securities exchange or automated quotation
system means a day on which such exchange or system is open for a full day of
trading.
"Unrestricted Affiliate" means any direct or indirect Minority Owned
Affiliate of the Company other than a Restricted Affiliate.
"Unrestricted Subsidiary" means any Person that is designated by the Board
of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution, but
in each case such designation may be made and shall be effective only if such
Person: (a) is not a party to any contract, agreement, understanding or other
arrangement of any kind (other than in respect of management, operating or
technical assistance) with the Company or any of its Restricted Subsidiaries
other than on terms no less favorable to the Company or such Restricted
Subsidiary than those that could be obtained from Persons who are not Affiliates
of the Company; (b) is a Person with respect to which neither the Company nor
any of its Restricted Subsidiaries has any direct or indirect obligation (x) to
subscribe for additional Equity Interests or (y) to maintain or preserve such
Person's financial condition or to cause such Person to achieve any specified
levels of operating results; and (c) has not guaranteed or otherwise directly or
indirectly provided credit support for any Indebtedness of the Company or any of
its Restricted Subsidiaries. Any such designation by the Board of Directors will
be required to be evidenced to the Trustee by filing with the Trustee a
certified copy of the board resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing conditions and was permitted by the covenant described above under the
caption "Certain Covenants -- Restricted Payments." If at any time, any
Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary
shall be deemed to be incurred by a Restricted Subsidiary of the Company as of
such date (and, if such Indebtedness is not permitted to be incurred as of such
date under the covenant described under the caption "Incurrence of Indebtedness
and Issuance of Disqualified Stock," the Company shall be in default of such
covenant).
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<PAGE> 76
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the sum of the
products obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (y) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (b) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of that Person or a combination thereof.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
Set forth below is a summary description of the Original Notes and the OPI
loan facility. Each of the following summaries does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, all the
provisions of the documents governing such debt instruments. Capitalized terms
used and not defined below have the meanings set forth in the documents
governing such debt instruments.
THE ORIGINAL NOTES
In August 1995, the Company issued the Original Notes at a discount to
their aggregate principal amount at maturity to generate gross proceeds to the
Company of $148,621,621. As disclosed elsewhere herein, the Company commenced
the Tender Offer on February 6, 1998 and the Tender Offer expired on March 18,
1998. As of March 31, 1998, approximately $49.0 million aggregate principal
amount at maturity of the Original Notes remained outstanding. The Original
Notes will mature on August 15, 2000.
OPI FACILITY
OPI has a syndicated bank loan facility for 1,800 billion lire ($991
million). On August 29, 1997, OPI signed an Amended and Restated Facility
Agreement which, among other things, provides for an increase in the facility of
1,000 billion lire ($550 million) from 1,800 billion lire to 2,800 billion lire
($1.5 billion). The Amended and Restated Facility Agreement includes a number of
significant covenants that will, among other things, restrict the ability of OPI
to dispose of assets, merge, incur debt, pay dividends, create liens, make
certain investments or acquisitions and otherwise restrict corporate activities.
In addition, the Amended and Restated Facility agreement contains, among other
covenants, requirements that OPI maintain specified financial ratios.
OPI has arranged or is arranging an 800 billion lire credit facility
through the European Investment Bank, a 100 billion lire subordinated debt
facility through the European Investment Fund and a 100 billion lire
subordinated credit facility to be provided by its shareholders Omnitel and
Pronto Italia.
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<PAGE> 78
THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES
Upon the terms and conditions set forth in this Prospectus and in the
accompanying Letter of Transmittal (which together constitute the Exchange
Offer), the Company will accept for exchange Old Notes which are properly
tendered on or prior to the Expiration Date and not withdrawn as permitted
below. As used herein, the term "Expiration Date" means 5:00 p.m., New York City
time, on June 12, 1998; provided, however, that if the Company, in its sole
discretion, has extended the period of time for which the Exchange Offer is
open, the term "Expiration Date" means the latest time and date to which the
Exchange Offer is extended.
As of the date of this Prospectus, EURO 235,000,000 aggregate principal
amount of the Old Notes is outstanding. This Prospectus, together with the
Letter of Transmittal, is first being sent on or about May 13, 1998, to all
Holders of Old Notes known to the Company. The Company's obligation to accept
Old Notes for exchange pursuant to the Exchange Offer is subject to certain
conditions as set forth under "-- Certain Conditions to the Exchange Offer"
below.
The Company expressly reserves the right, at any time or from time to time,
to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance for exchange of any Old Notes, by giving oral written
notice of such extension to the Holders thereof as described below. During any
such extension, all Old Notes previously tendered will remain subject to the
Exchange Offer and may be accepted for exchange by the Company. Any Old Notes
not accepted for exchange for any reason will be returned without expense to the
tendering Holder thereof as promptly as practicable after the expiration or
termination of the Exchange Offer.
Old Notes tendered in the Exchange Offer must be in denominations of
principal amount of EURO 1,000 and any integral multiple thereof.
The Company expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Old Notes not theretofore accepted for
exchange, upon the occurrence of any of the conditions of the Exchange Offer
specified below under "-- Certain Conditions to the Exchange Offer." The Company
will give oral or written notice of any extension, amendment, non-acceptance or
termination to the Holders of the Notes as promptly as practicable, such notice
in the case of any extension to be issued by means of a press release or other
public announcement no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date.
PROCEDURES FOR TENDERING OLD NOTES
The tender to the Company of Old Notes by a Holder thereof as set forth
below and the acceptance thereof by the Company will constitute a binding
agreement between the tendering Holder and the Company upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal. Except as set forth below, a Holder who wishes to tender
Old Notes for exchange pursuant to the Exchange Offer must transmit a properly
completed and duly executed Letter of Transmittal, including all other documents
required by such Letter of Transmittal or (in the case of a book-entry transfer)
an Agent's Message in lieu of such Letter of Transmittal, to The Chase Manhattan
Bank (the "Exchange Agent") at the address set forth below under "Exchange
Agent" on or prior to the Expiration Date. In addition, either (i) certificates
for such Old Notes must be received by the Exchange Agent along with the Letter
of Transmittal, or (ii) a timely confirmation of a book-entry transfer (a
"Book-Entry Confirmation") of such Old Notes, if such procedure is available,
into the Exchange Agent's account at a depositary (the "Book-Entry Transfer
Facility") pursuant to the procedure for book-entry transfer described below,
must be received by the Exchange Agent prior to the Expiration Date with the
Letter of Transmittal or an Agent's Message in lieu of such Letter of
Transmittal, or (iii) the Holder must comply with the guaranteed delivery
procedures described below. The term "Agent's Message" means a message,
transmitted by the Book-Entry Transfer Facility to and received by the Exchange
Agent and forming a part of a Book-Entry Confirmation, which states that the
Book-Entry Transfer Facility has received an express acknowledgment from the
tendering participant, which acknowledgment states that such participant has
received and agrees to be bound by the Letter of Transmittal
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and that the Company may enforce such Letter of Transmittal against such
participant. THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED,
WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD
BE SENT TO THE COMPANY.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Old Notes surrendered for exchange
pursuant thereto are tendered (i) by a Holder of the Old Notes who has not
completed the box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution (as defined below). In the event that signatures on a
Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantees must be by a firm which is a member
of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
having an office or correspondent in the United States (collectively, "Eligible
Institutions"). If Old Notes are registered in the name of a person other than a
signer of the Letter of Transmittal, the Old Notes surrendered for exchange must
be endorsed by, or be accompanied by a written instrument or instruments of
transfer or exchange, in satisfactory form as determined by the Company in its
sole discretion, duly executed by the registered national securities exchange
with the signature thereon guaranteed by an Eligible Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined by
the Company in its sole discretion, which determination shall be final and
binding. The Company reserves the absolute right to reject any and all tenders
of any particular Old Note not properly tendered or to not accept any particular
Old Note which acceptance might, in the judgment of the Company or its counsel,
be unlawful. The Company also reserves the absolute right to waive any defects
or irregularities or conditions of the Exchange Offer as to any particular Old
Note either before or after the Expiration Date (including the right to waive
the ineligibility of any Holder who seeks to tender Old Notes in the Exchange
Offer). The interpretation of the terms and conditions of the Exchange Offer as
to any particular Old Note either before or after the Expiration Date (including
the Letter of Transmittal and the instructions thereto) by the Company shall be
final and binding on all parties. Unless waived, any defects or irregularities
in connection with tenders of Old Notes for exchange must be cured within such
reasonable period of time as the Company shall determine. Neither the Company,
the Exchange Agent nor any other person shall be under any duty to give
notification of any defect or irregularity with respect to any tender of Old
Notes for exchange, nor shall any of them incur any liability for failure to
give such notification.
If the Letter of Transmittal is signed by a person or persons other than
the registered Holder or Holders of Old Notes, such Old Notes must be endorsed
or accompanied by powers of attorney, in either case signed exactly as the name
or names of the registered Holder or Holders that appear on the Old Notes.
If the Letter of Transmittal or any Old Notes or powers of attorneys are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and, unless waived by
the Company, proper evidence satisfactory to the Company of their authority to
so act must be submitted with the Letter of Transmittal.
By tendering, each Holder will represent to the Company that, among other
things, the New Notes acquired pursuant to the Exchange Offer are being obtained
in the ordinary course of business of the person receiving such New Notes,
whether or not such person is the Holder and that neither the Holder nor such
other person has any arrangement or understanding with any person to participate
in the distribution of the New Notes. If any Holder or any such other person is
an "affiliate", as defined under Rule 405 of the Securities Act, of the Company,
is engaged in or intends to engage in or has an arrangement or understanding
with any person to participate in a distribution of such New Notes to be
acquired pursuant to the Exchange Offer, such Holder or any such other person
(i) could not rely on the applicable interpretations of the staff of the
Commission and (ii) must with the registration and prospectus delivery
requirements of the Securities Act
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in connection with any resale transaction. Each broker-dealer that receives New
Notes for its own account in exchange for Old Notes, where such Old Notes were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. See "Plan of Distribution." The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
the Company will accept, promptly after the Expiration Date, all Old Notes
properly tendered and will issue the New Notes promptly after acceptance of the
Old Notes. See "-- Certain Conditions to the Exchange Offer" below. For purposes
of the Exchange Offer, the Company shall be deemed to have accepted properly
tendered Old Notes for exchange when, as and if the Company has given oral
(promptly confirmed in writing) or written notice thereof to the Exchange Agent.
For each Old Note accepted for exchange, the Holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Old Note. Accordingly, registered Holders of New Notes on the relevant record
date for the first interest payment date following the consummation of the
Exchange Offer receive interest accruing from the most recent date to which
interest has been paid or, if no interest has been paid, from January 31, 1997.
Holders of Old Notes whose Old Notes are accepted for exchange will not receive
any payment in respect of Accreted Value on such Old Notes otherwise payable on
any interest payment date the record date for which occurs on or after the
consummation of the Exchange Offer. Pursuant to the Registration Rights
Agreement, certain additional payments are required to be made to Holders of Old
Notes under certain circumstances relating to the timing of Exchange Offer.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of (i) certificates for such Old Notes or a timely
Book-Entry Confirmation of such Old Notes into the Exchange Agent's account at
the Book-Entry Transfer Facility, (ii) a properly completed and duly executed
Letter of Transmittal or an Agent's Message in lieu thereof and (iii) all other
required documents. If any tendered Old Notes are not accepted for any reason
set forth in the terms and conditions of the Exchange Offer or if Old Notes are
submitted for a greater principal amount than the Holder desires to exchange,
such unaccepted or non-exchanged Old Notes will be returned without expense to
the tendering Holder thereof (or, in the case of Old Notes tendered by
book-entry transfer into the Exchange Agent's account at the Book-Entry Transfer
Facility pursuant to the book-entry procedures described below, such
non-exchanged Old Notes will be credited to an account maintained with such
Book-Entry Transfer Facility) as promptly as practicable after the expiration or
termination of the Exchange Offer.
BOOK-ENTRY TRANSFERS
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus unless
an Exchange Agent already has established an account with the Book-Entry
Transfer Facility suitable for the Exchange Offer, and any financial institution
that is a participant in the Book-Entry Transfer Facility systems may make
book-entry delivery of Old Notes by causing the Book-Entry Transfer Facility to
Transfer such Old Notes into the Exchange Agent's account at the Book-Entry
Transfer Facility in accordance with such Book-Entry Transfer Facility's
procedures for transfer. However, although delivery of Old Notes may be effected
through book-entry transfer at the Book-Entry Transfer Facility, the Letter of
Transmittal or facsimile thereof or an Agent's Message in lieu thereof, with any
required signature guarantees and any other required documents, must, in any
case, be transmitted to and received by the Exchange Agent at the address set
forth below under "-- Exchange Agent" on or prior to the Expiration Date or the
guaranteed delivery procedures described below must be complied with.
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GUARANTEED DELIVERY PROCEDURES
If a Holder of the Old Notes desires to tender such Old Notes and the Old
Notes are not immediately available, or time will not permit such Holder's Old
Notes or other required documents to reach the Exchange Agent before the
procedure for book-entry transfer cannot be completed on a timely basis, a
tender may be effected if (i) the tender is made through an Eligible
Institution, (ii) prior to the Expiration Date, the Exchange Agent received from
such Eligible Institution a Notice of Guaranteed Delivery, substantially in the
form provided by the Company (by telegram, telex, facsimile transmission, mail
or hand delivery), setting forth the name and address of the Holder of the Old
Notes and the amount of Old Notes tendered, stating that the tender is being
made thereby and guaranteeing that within five New York Stock Exchange ("'NYSE")
trading days after the date of execution of the Notice of Guaranteed Delivery,
the certificates for all physically tendered Old Notes, in proper form for
transfer, or a Book-Entry Confirmation, as the case may be, together with a
properly completed and duly executed appropriate Letter of Transmittal (or
facsimile thereof or Agent's Message in lieu thereof) with any required
signature guarantees and any other documents required by the Letter of
Transmittal will be deposited by the Eligible Institution with the Exchange
Agent, and (iii) the certificates for all physically tendered Old Notes, in
proper form for transfer, or a Book-Entry Confirmation, as the case may be,
together with a properly completed and duly executed appropriate Letter of
Transmittal (or facsimile thereof or Agent's Message in lieu thereof) with any
required signature guarantees and all other documents required by the Letter of
Transmittal, are received by the Exchange Agent within five NYSE trading days
after the date of execution the Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the Expiration Date. For a withdrawal to be effective, a
written notice of withdrawal must be receive by the Exchange Agent at one of the
addresses set forth below under "-- Exchange Agent." Any such notice of
withdrawal must (i) specify the name of the person having tendered the Old Notes
to be withdrawn, (ii) the Old Notes to be withdrawn (including the principal
amount of such Old Notes), and (iii) (where certificates for Old Notes have been
transmitted) specify the name in which such Old Notes are registered, if
different from that of the withdrawing Holder. If certificates for Old Notes
have been delivered or otherwise identified to the Exchange Agent, then, prior
to the release of such certificates the withdrawing Holder must also submit the
serial numbers of the particular certificates to be withdrawn and a signed
notice of withdrawal with signatures guaranteed by an Eligible Institution
unless such Holder is an Eligible Institution. If Old Notes have been tendered
pursuant to the procedure for book-entry transfer described above, any notice of
withdrawal must specify the name and number of the account at the Book-Entry
Transfer Facility to be credited with the withdrawn Old Notes and otherwise
comply with the procedures of such facility. All questions as to the validity,
form and eligibility (including time of receipt) of such notices will be
determined by the Company, whose determination shall be final and binding on all
parties. Any Old Notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer. Any Old Notes which
have been tendered for exchange but which are not exchanged for any reason will
be returned to the Holder thereof without cost to such Holder (or, in the case
of Old Notes tendered by book-entry transfer into the Exchange Agent's account
at the Book-Entry Transfer Facility pursuant to the book-entry transfer
procedures described above, such Old Notes will be credited to an account
maintained with such Book-Entry Transfer Facility for the Old Notes) as soon as
practicable after withdrawal, rejection of tender or termination of the Exchange
Offer. Properly withdrawn Old Notes may be retendered by following one of the
procedures described under "-- Procedures for Tendering Old Notes" above at any
time on or prior to 5:00 p.m., New York City time, on the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue New Notes in exchange
for, any Old Notes and may terminate or amend the
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Exchange Offer, if at any time before the acceptance of such Old Notes, any of
the following events shall occur:
(a) there shall be threatened, instituted or pending any action or
proceeding before, or any injunction, order or decree shall have been
issued by, any court or governmental agency or other governmental
regulatory or administrative agency or commission, (i) seeking to restrain
or prohibit the making or consummation of the Exchange Offer or any other
transaction contemplated by the Exchange Offer, or assessing or seeking any
damages as a result thereof, or (ii) resulting in a material delay in the
ability of the Company to accept for exchange or exchange some or all of
the Old Notes pursuant to the Exchange Offer; or any statute, rule,
regulation, order or injunction shall be sought, proposed, introduced,
enacted, promulgated or deemed applicable to the Exchange Offer or any of
the transactions contemplated by the Exchange Offer by any government or
governmental authority, domestic or foreign, or any action shall have been
taken, proposed or threatened, by any government, governmental authority,
agency or court, domestic or foreign, that in the sole judgment of the
Company might directly or indirectly result in any of the consequences
referred to in clauses (i) or (ii) above or, in the sole judgment of the
Company, might result in the holders of New Notes having obligations with
respect to resales and transfers of New Notes which are greater than those
described in the interpretation of the Commission referred to on the cover
page of this Prospectus, or would otherwise make it inadvisable to proceed
with the Exchange Offer; or
(b) there shall have occurred (i) any general suspension of or general
limitation on prices for, or trading in, securities on any national
securities exchange or in the over-the-counter market, (ii) any limitation
by an governmental agency or authority which may adversely affect the
ability of the Company to complete the transactions contemplated by the
Exchange Offer, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or any
limitation by any governmental agency or authority which adversely affects
the extension of credit or (iv) a commencement of a war, armed hostilities
or other similar international calamity directly or indirectly involving
the United States, or, in the case of any of the foregoing existing at the
time of the commencement of the Exchange Offer, a material acceleration or
worsening thereof; or
(c) any change (or any development involving a prospective change)
shall have occurred or be threatened in the business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects of the Company and its subsidiaries taken as a whole that, in the
sole judgment of the Company, is or may be adverse to the Company, or the
Company shall have become aware of facts that, in the sole judgment of the
Company, have or may have adverse significance with respect to the value of
the Old Notes or the New Notes;
which in the sole judgment of the Company in any case, and regardless of the
circumstances (including any action by the Company) giving rise to any such
condition, makes it inadvisable to proceed with the Exchange Offer and/or with
such acceptance for exchange or with such exchange.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its sole discretion. The failure by the Company at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes, if
at such time any stop order shall be threatened or in effect with respect to the
Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939, as
amended.
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EXCHANGE AGENT
The Chase Manhattan Bank has been appointed as the Exchange Agent for the
Exchange Offer. All executed Letters of Transmittal should be directed to the
Exchange Agent at the address set forth below. Questions and requests for
assistance, requests for additional copies of this Prospectus or of the Letter
of Transmittal and requests for Notices of Guaranteed Delivery should be
directed to the Exchange Agent addressed as follows:
Main Delivery to: The Chase Manhattan Bank,
As Principal Exchange Agent
In London:
<TABLE>
<S> <C>
By Mail, By Hand and Overnight Courier: By Facsimile:
The Chase Manhattan Bank 011-44-171-777-5410
Trinity Tower
9 Thomas More Street Confirm by Telephone:
London E1 9YT
Attention: Manager, Corporate Trust Operations 011-44-171-777-5414
</TABLE>
As Exchange Agent
In Luxembourg:
<TABLE>
<S> <C>
By Mail, By Hand and Overnight Courier: By Facsimile:
Chase Manhattan Bank Luxembourg S.A. 011-352-46-26-85380
5 Rue Plaetis
L-2338, Luxembourg Confirm by Telephone:
Attention: Manager, Corporate Trust Operations
011-352-46-26-85284
</TABLE>
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF SUCH LETTER OF TRANSMITTAL VIA FACSIMILE OTHER THAN AS
SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF LETTER OF TRANSMITTAL.
FEES AND EXPENSES
The Company will not make any payment to brokers, dealers, or others
soliciting acceptances of the Exchange Offer except for reimbursement of mailing
expenses.
The estimated cash expenses to be incurred in connection with the Exchange
Offer will be paid by the Company and are estimated in the aggregate to be
$200,000.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that Holders who instruct
the Company to register New Notes in the name of, or request that Old Notes not
tendered or not accepted in the Exchange Offer be returned to, a person other
that the registered tendering Holder will be responsible for the payment of any
applicable transfer tax thereon.
CONSEQUENCES OF EXCHANGING OLD NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the provisions in
the Indenture regarding transfer and exchange of the Old Notes and the
restrictions on transfer of such Old Notes as set forth in the legend thereon as
a consequence of the issuance of the Old Notes pursuant to exemptions from, or
in transactions not subject to, the registration requirements of the Securities
Act and applicable state securities laws. In general, the Old Notes may not be
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offered or sold, unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Company does not currently anticipate that
it will register Old Notes under the Securities Act. See "Description of the
Notes -- Exchange Offer; Registration Rights." Based on interpretations by the
staff of the Commission, as set forth in no-action letters issued to third
parties, the Company believes that New Notes issued pursuant to the Exchange
Offer in exchange for Old Notes may be offered for resale, resold or otherwise
transferred by Holders thereof (other than any such Holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such New Notes are acquired in
the ordinary course of such Holder's business and such Holder has no arrangement
or understanding with any person to participate in the distribution of such New
Notes. However, the Commission has not considered the Exchange Offer in the
context of a no-action letter and there can be no assurance that the staff of
the Commission would make a similar determination with respect to the Exchange
Offer as in such other circumstances. Each Holder, other than a broker-dealer,
must acknowledge that it is not engaged in, and does not intend to engage in, a
distribution of such New Notes and has no arrangement or understanding to
participate in a distribution of New Notes. If any Holder is an affiliate of the
Company, is engaged in or intends to engage in or has any arrangement or
understanding with respect to the distribution of New Notes to be acquired
pursuant to the Exchange Offer, such Holder (i) could not rely on the applicable
interpretations of the staff of the Commission and (ii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Each broker-dealer that receives New
Notes for its own account in exchange for Old Notes must acknowledge that such
Old Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities and that it will deliver a prospectus in
connection with any resale of such New Notes. See "Plan of Distribution." In
addition, to comply with the securities laws of certain jurisdictions, if
applicable, the New Notes may not be offered or sold unless they have been
registered or qualified for sale in such jurisdiction or an exemption from
registration or qualification is available and is complied with. The Company has
agreed, pursuant to the Registration Rights Agreement, subject to certain
limitations specified therein, to register or qualify the New Notes for offer or
sale under the securities laws of such jurisdictions as any Holder reasonably
requests in writing. Unless a Holder so requests, the Company does not intend to
register or qualify the sale of the New Notes in any such jurisdictions.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of certain U.S. federal income tax
consequences associated with the exchange of the Old Notes for the New Notes
pursuant to the Exchange Offer, and the ownership of the New Notes.
It deals with Notes held as capital assets by initial purchasers and does
not deal with special situations, such as those of dealers in securities,
financial institutions, life insurance companies, holders whose "functional
currency" is not the U.S. dollar, or special rules with respect to certain
"straddle" or hedging transactions. The discussion below is based upon the
Internal Revenue Code of 1986, as amended (the "Code"), and regulations, rulings
and judicial decisions thereunder as of the date hereof, and such authorities
may be repealed, revoked or modified (including retroactively) so as to result
in federal income tax consequences different from those discussed below. HOLDERS
ARE URGED TO CONSULT THEIR TAX ADVISORS CONCERNING THE FEDERAL INCOME TAX
CONSIDERATIONS THAT MAY BE SPECIFIC TO THEM OF THE EXCHANGE OF OLD NOTES FOR NEW
NOTES AND THE OWNERSHIP OF THE NEW NOTES, AS WELL AS ANY TAX CONSEQUENCES
ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION.
EXCHANGE OF NOTES
The exchange of the Old Notes for the New Notes pursuant to the Exchange
Offer should not be treated as an "exchange" for U.S. federal income tax
purposes because the New Notes should not be considered to differ materially in
kind or extent from the Old Notes. Rather, the New Notes received by a Holder
should be treated as a continuation of the Old Notes in the hands of such
Holder. As a result, there should be no U.S. federal income tax consequences to
Holders exchanging the Old Notes for the New Notes pursuant to the Exchange
Offer, and any exchanging Holder of Old Notes should have the same tax basis and
holding period in the New Notes as such Holder had in the Old Notes immediately
prior to the exchange.
TAXATION OF U.S. HOLDERS
The following discussion is limited to the U.S. federal income tax
consequences relevant to a holder of a New Note that is (i) a citizen or
resident of the United States, (ii) a corporation or partnership created or
organized under the laws of the United States or any political subdivision
thereof or therein, (iii) an estate or trust described in Section 7701(a)(30) of
the Code or (iv) a person whose worldwide income or gain is otherwise subject to
U.S. federal income taxation on a net income basis (a "U.S. Holder"). Certain
U.S. federal income tax consequences relevant to a holder other than a U.S.
Holder are discussed separately below.
Original Issue Discount. Because the Old Notes were issued with original
issue discount ("OID") for federal income tax purposes, the New Notes will also
bear OID that each holder of New Notes generally will be required to include in
income as it accrues on a yield-to-maturity basis over the term of the New Notes
in advance of cash payments attributable to such income (regardless of whether
the holder is a cash or accrual basis taxpayer). The amount of OID with respect
to a New Note will equal the excess of the stated redemption price at maturity
of such Note over its issue price. The stated redemption price at maturity for
the New Notes will include all payments required to be made on the New Notes
whether denominated as principal or interest (other than payments subject to
remote or incidental contingencies). The issue price of the New Notes equals the
issue price of the Old Notes, which was Euro 624.55 per 1,000 in principal
amount of Old Notes.
A holder of a debt instrument that bears OID is required to include in
gross income an amount equal to the sum of the daily portions of OID for each
day during the taxable year in which the holder holds the debt instrument. The
daily portions of OID are determined by allocating to each day in an accrual
period the pro rata portion of the OID that is allocable to the accrual period.
The amount of OID that is allocable to an accrual period with respect to the New
Notes generally will be equal to the product of the adjusted issue price of the
New Notes at the beginning of the accrual period (the issue price of the New
Notes determined as described above, generally increased by all prior accruals
of OID made with respect to, and decreased by the
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amount of payments made on, the Old Notes and the New Notes) and the New Notes'
yield-to-maturity (the discount rate, which, when applied to all payments under
the Old Notes and the New Notes, results in a present value equal to the issue
price of the New Notes). In the case of the final accrual period, the allocable
OID generally is the difference between the amount payable at maturity and the
adjusted issue price at the beginning of the accrual period. All payments on a
Note generally will be viewed first as a payment of previously accrued OID (to
the extent thereof), with payments considered made from the earliest accrual
period, and then as a payment of principal.
The New Notes will be denominated in a currency unit other than the U.S.
dollar. Accordingly, (i) OID will be determined in units of the foreign
currency, (ii) such accrued discount will be translated into U.S. dollars (as
described in the next paragraph), and (iii) the amount of foreign currency gain
or loss on the accrued discount will be determined by comparing the amount of
income received attributable to the discount (either upon payment, maturity or
an earlier disposition), as translated into U.S. dollars at the rate of exchange
on the date of such receipt, with the amount of discount accrued, as so
translated.
The U.S. dollar value of accrued OID income will be determined by
translating such income at the average rate of exchange for the accrual period,
or with respect to an accrual period that spans two taxable years, at the
average rate for the partial period within the taxable year. A U.S. holder may
elect, however, to translate such accrued interest income using the rate of
exchange on the last day of the accrual period or, with respect to an accrual
period that spans two taxable years, using the rate of exchange on the last day
of the taxable year. If the last day of an accrual period is within five
business days of the receipt of the accrued income, a U.S. holder may translate
such income using the rate of exchange on the date of receipt. The above
election will apply to other debt obligations held by the holder and may not be
changed without the consent of the Internal Revenue Service (the "IRS"). Whether
or not such election is made, a holder may recognize exchange gain or loss
(which will be treated as ordinary income or loss) with respect to accrued OID
income on the date such income is received. The amount of ordinary income or
loss recognized will equal the difference, if any, between the U.S. dollar value
of the foreign currency payment received (determined on the date such payment is
received) in respect of such accrual period and the U.S. dollar value of income
that has accrued during such accrual period (as determined above).
The Company will furnish annually to the IRS and to holders (other than
with respect to certain exempt holders, including, in particular, corporations)
information with respect to the OID accruing while the New Notes were held by
the holders.
Under certain circumstances described above, the Company will be required
to pay Liquidated Damages on the New Notes if it fails to comply with certain of
its obligations under the Registration Rights Agreement. See "Description of the
Notes -- Exchange Offer; Registration Rights." Although not free from doubt,
such additional amount should be taxable to a U.S. Holder as ordinary income at
the time it accrues or is received in accordance with such holder's regular
method of accounting. It is possible, however, that the IRS may take a different
position, in which case the time and the amount of income on the New Notes may
be different.
Disposition of New Notes. A holder will generally recognize gain or loss
upon the sale, exchange, retirement or other disposition of New Notes equal to
the difference between the amount realized on the disposition (other than
amounts attributable to accrued but unpaid interest) and the holder's adjusted
tax basis in the New Notes. A holder's adjusted tax basis in a New Note will
generally be the cost of the Old Note, increased by any OID previously included
in income by such holder and decreased by any amount received on the Note. Such
gain or loss generally would be capital gain or loss (except to the extent of
any exchange gain or loss with respect to foreign currency, as discussed below).
In the case of a U.S. Holder who is an individual, such capital gain will be
subject to tax at a maximum 28% rate if the holding period for the New Note
(which includes the holding period of the Old Note) exceeds 12 months but is not
more than 18 months at the time of the sale, exchange, retirement or other
disposition, and a maximum 20% rate if such holding periods exceeds 18 months at
such time.
If a holder receives foreign currency on a sale, exchange, retirement or
other disposition of a New Note, the amount realized will be based on the U.S.
dollar value of the foreign currency on the date of disposition (assuming the
New Notes are not publicly traded). A holder's adjusted tax basis in a New Note
will equal the
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U.S. dollar cost of the Old Note (determined on the date of purchase) to such
holder, increased by the U.S. dollar value of the amounts of any OID previously
included in income by the holder with respect to the Old Note or New Note and
reduced by the U.S. dollar value of any payments received by the holder (other
than payments representing ordinary interest income). In the case of an
adjustment resulting from the accrual of OID, such adjustment will be made at
the rate at which such OID is translated into U.S. dollars under the rules
described above. If a holder purchases an Old Note with previously owned foreign
currency, the holder will recognize ordinary income or loss in an amount equal
to the difference, if any, between such holder's tax basis in the foreign
currency and the U.S. dollar fair market value of the foreign currency used to
purchase the Note, determined on the date of purchase.
For purposes of the foregoing, there is a special rule for purchases and
sales of publicly traded New Notes by a cash basis taxpayer under which units of
foreign currency paid or received are translated into U.S. dollars at the spot
rate on the settlement date of the purchase or sale. In that case, no exchange
gain or loss will result from currency fluctuations between the trade date and
the settlement of such a purchase or sale. An accrual basis taxpayer may elect
the same treatment required of cash basis taxpayers with respect to purchases
and sales of publicly traded New Notes, provided the election is applied
consistently. Such election cannot be changed without the consent of the IRS.
Gain or loss realized upon the sale, exchange, or retirement of a New Note
that is attributable to fluctuations in currency exchange rates will be ordinary
income or loss, which will not be treated as interest income or expense. Gain or
loss attributable to fluctuations in exchange rates will equal the difference
between the U.S. dollar value of the foreign currency principal amount (which
means, for this purpose, purchase price) of the New Note, determined on the date
such payment is received or the New Note is disposed of, and the U.S. dollar
value of the foreign currency principal amount of such Note, determined on the
date the U.S. holder acquired the Old Note. Such foreign currency gain or loss
will be recognized only to the extent of the total gain or loss realized by the
holder on the sale, exchange or retirement of the New Note.
The above discussion assumes that the change to denominate the New Notes in
EUROs will not be a taxable event for federal income tax purposes. Holders
should be aware that the IRS has announced that it is studying the tax
consequences relating to the conversion to EUROs, including whether conversion
to a EURO-denominated currency is the appropriate time to recognize any
resulting gain or loss. Holders should consult their own tax advisors regarding
the tax effect, if any, of changing to EURO-denominated New Notes.
CERTAIN POTENTIAL FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY
Special U.S. tax rules apply to U.S. taxpayers that own stock in a "passive
foreign investment company" (a "PFIC"). In general, a non-U.S. corporation will
be treated as a PFIC if at least 75 percent of its income is "passive income" or
if at least 50 percent of its assets are held for the production of "passive
income." A non-U.S. corporation that owns 25 percent or more of the stock of a
non-U.S. subsidiary is treated as receiving a proportionate share of the income
of, and as owning a proportionate share of the assets of, such subsidiary.
It is possible that Omnitel is a PFIC. Generally, except to the extent the
Company makes an election to treat a PFIC in which it owns stock as a "qualified
electing fund" (a "QEF") in the first taxable year in which the Company owns the
PFIC's stock, (i) the Company would be required to allocate gain recognized upon
the disposition of stock in the PFIC and income recognized upon receiving
certain dividends ratably over the Company's holding period for the stock in the
PFIC, (ii) the amount allocated to each year other than the year of the
disposition or dividend payment would be taxable at the highest U.S. tax rate
applicable to corporations, and an interest charge for the deemed deferral
benefit would be imposed with respect to the tax attributable to each year, and
(iii) gain recognized upon disposition of PFIC shares would be taxable as
ordinary income. The Company acquired shares in Omnitel in 1990. The regular
deadline for making a QEF election for 1990 was in 1991. In December 1997, new
temporary regulations were issued by the Treasury Department pursuant to which
the Company is seeking a ruling from the IRS that would allow the Company to
retroactively make the QEF election as described above. No assurance can be
given that the IRS will grant such ruling request. If the Company cannot make
the QEF election retroactively, on a sale of its Omnitel
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shares or the receipt of certain dividends from Omnitel, the Company would be
subject to U.S. federal income tax and to an interest charge on that tax over
its holding period commencing in 1990, as described above.
If the Company were to make the QEF election, as described above, the
Company would be required in each year that the PFIC qualification tests are met
to include its pro rata share of the QEF's earnings as ordinary income and its
pro rata share of the QEF's net capital gain as long-term capital gain, whether
or not such amounts are actually distributed. The Company has not made any QEF
election with respect to Omnitel.
TAXATION OF NON-U.S. HOLDERS
The following discussion is limited to U.S. federal income tax consequences
relevant to a holder of a New Note that is not a U.S. Holder (a "Non-U.S.
Holder").
Subject to the discussion of backup withholding below, payments of interest
(including OID) on a New Note to any Non-U.S. Holder will generally not be
subject to U.S. federal income or withholding tax, provided that (1) the holder
is not (i) a direct or indirect owner of 10% or more of the total voting power
of all voting stock of the Company, (ii) a controlled foreign corporation
related to the Company through stock ownership or (iii) a foreign tax-exempt
organization or a foreign private foundation for U.S. federal income tax
purposes, (2) such interest payments are not effectively connected with the
conduct by the Non-U.S. Holder of a trade or business within the United States
and (3) the Company or its paying agent receives (i) from the Non-U.S. Holder, a
properly completed Form W-8 (or substitute Form W-8) under penalties of perjury
which provides the Non-U.S. Holder's name and address and certifies that the
Non-U.S. Holder of the New Note is a Non-U.S. Holder or (ii) from a security
clearing organization, bank or other financial institution that holds the New
Notes in the ordinary course of its trade or business (a "financial
institution") on behalf of the Non-U.S. Holder, certification under penalties of
perjury that such a Form W-8 (or substitute Form W-8) has been received by it,
or by another such financial institution, from the Non-U.S. Holder, and a copy
of the Form W-8 (or substitute Form W-8) is furnished to the payor.
A Non-U.S. Holder that does not qualify for exemption from withholding
under the preceding paragraph generally will be subject to withholding of U.S.
federal income tax at the rate of 30% (or lower applicable treaty rate) on
payments of interest (including OID) on the New Notes.
If the payments of interest (including OID) on a New Note are effectively
connected with the conduct by a Non-U.S. Holder of a trade or business in the
United States, such payments will be subject to U.S. federal income tax on a net
basis at the rates applicable to United States persons generally (and, with
respect to corporate holders, may also be subject to a 30% branch profits tax).
If payments are subject to U.S. federal income tax on a net basis in accordance
with the rules described in the preceding sentence, such payments will not be
subject to United States withholding tax so long as the holder provides the
Company or its paying agent with a properly executed Form 4224.
Non-U.S. Holders should consult any applicable income tax treaties, which
may provide for a lower rate of withholding tax, exemption from or reduction of
branch profits tax, or other rules different from those described above.
Disposition of New Notes. Subject to the discussion concerning backup
withholding, any gain realized by a Non-U.S. Holder on the sale, exchange,
retirement or other disposition of a New Note generally will not be subject to
U.S. federal income tax, unless (i) such gain is effectively connected with the
conduct by such Non-U.S. Holder of a trade or business within the United States,
(ii) the Non-U.S. Holder is an individual who is present in the United States
for 183 days or more in the taxable year of the disposition and certain other
conditions are satisfied, or (iii) the Non-U.S. Holder is subject to tax
pursuant to the provisions of U.S. tax law applicable to certain U.S.
expatriates.
Federal Estate Tax. New Notes held (or treated as held) by an individual
who is a Non-U.S. Holder at the time of his or her death will not be subject to
U.S. federal estate tax provided that (i) the individual does not actually or
constructively own 10% or more of the total voting power of all voting stock of
the Company and (ii) income on the Notes was not effectively connected with the
conduct by such Non-U.S. Holder of a trade or business within the United States.
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Information Reporting and Backup Withholding. The Company must report
annually to the IRS and to each Non-U.S. Holder any interest (including OID)
that is subject to withholding or that is exempt from U.S. withholding tax.
Copies of those information returns may also be made available, under the
provisions of a specific treaty or agreement, to the tax authorities of the
country in which the Non-U.S. Holder resides.
The regulations provide that backup withholding (which generally is a
withholding tax imposed at the rate of 31% on payments to persons that fail to
furnish certain required information) and information reporting will not apply
to payments made in respect to the New Notes by the Company to a Non-U.S.
Holder, if the holder certifies as to its non-U.S. status under penalties of
perjury or otherwise established an exemption (provided that neither the Company
nor its paying agent has actual knowledge that the holder is a U.S. person or
that the conditions of any other exemption are not, in fact, satisfied).
The payment of the proceeds from the disposition of New Notes to or through
the United States office of any broker, U.S. or foreign, will be subject to
information reporting and possible backup withholding unless the owner certifies
as to its non-U.S. status under penalty of perjury or otherwise establishes an
exemption, provided that the broker does not have actual knowledge that the
holder is a U.S. person or that the conditions of any other exemption are not,
in fact, satisfied. The payment of the proceeds from the disposition of a New
Note to or through a non-U.S. office of a non-U.S. broker that is not a U.S.
related person will not be subject to information reporting or backup
withholding. For this purpose, a "U.S. related person" is (i) a "controlled
foreign corporation" for U.S. federal income tax purposes or (ii) a foreign
person 50% 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 (or for
such part of the period that the broker has been in existence) is derived from
activities that are effectively connected with the conduct of a U.S. trade or
business.
In the case of the payment of proceeds from the disposition of New Notes to
or through a non-U.S. office of a broker that is a U.S. related person, the
regulations require information reporting on the payment unless the broker has
documentary evidence in its files that the owner is a Non-U.S. Holder and the
broker has no knowledge to the contrary. Backup withholding will not apply to
payments made through foreign offices of a broker that is a U.S. person or a
U.S. related person (absent actual knowledge that the payee is a U.S. person).
Any amounts withheld under the backup withholding rules from a payment to a
Non-U.S. Holder will be allowed as a refund or a credit against such Non-U.S.
Holder's U.S. federal income tax liability, provided that the requisite
procedures are followed.
The Treasury Department recently promulgated final regulations regarding
the withholding and information reporting rules discussed above. In general, the
final regulations do not significantly alter the substantive withholding and
information reporting requirements but rather unify current certification
procedures and forms and clarify reliance standards. The final regulations are
generally effective for payments made after December 31, 1999, subject to
certain transition rules. Non-U.S. Holders should consult their own tax advisors
with respect to the impact, if any, of the final regulations.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. The Company has agreed that, for a period of 90 days after
the Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until August 11, 1998, all dealers effecting transactions in the New
Notes may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such New Notes. Any broker-dealer that
resells New Notes that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that, by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
Holders of the Notes) other than commissions or concessions of any brokers or
dealers and will indemnify the Holders of the Notes (including any broker-
dealer) against certain liabilities, including liabilities under the Securities
Act.
There is no existing market for the New Notes. The New Notes have been
listed on the Luxembourg Stock Exchange. There can be no assurance as to the
liquidity of any market that may develop for the New Notes, the ability of
holders of the New Notes to sell their New Notes, or the price at which holders
would be able to sell their New Notes. Future trading prices of the New Notes
will depend on many factors, including, among other things, prevailing interest
rates, the Company's operating results and the market for similar securities.
LEGAL MATTERS
Certain legal matters regarding the Notes offered hereby will be passed
upon for the Company by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New
York.
EXPERTS
The consolidated financial statements of Cellular Communications
International, Inc., appearing in Cellular Communications International, Inc.'s
Annual Report (Form 10-K) for the year ended December 31, 1997, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
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The balance sheets of Omnitel Sistemi Radiocellulari Italiani S.p.A. as of
December 31, 1997 and 1996, and the related statements of operations,
stockholders' equity and cash flows for each of the three years ended December
31, 1997, and the balance sheets of Omnitel Pronto Italia S.p.A. as of December
31, 1997 and 1996, and the related statements of income, stockholders' equity
and cash flows for each of the three years ended December 31, 1997 incorporated
by reference herein from the Company's Annual Report on Form 10-K/A-1 have been
incorporated by reference herein in reliance of the report of Coopers & Lybrand
S.p.A., independent accountants given on the authority of that firm as experts
in accounting and auditing.
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GENERAL LISTING INFORMATION
LISTING
The New Notes are expected to be listed on the Luxembourg Stock Exchange.
The Restated Certificate of Incorporation of the Company and the legal notice
relating to the issue of the New Notes have been deposited with the Registrar of
the District Court in Luxembourg (Greffier en Chef du Tribunal d'Arrondissement
a Luxembourg), where such documents are available for inspection and where
copies thereof can be obtained upon request. As long as the New Notes are listed
on the Luxembourg Stock Exchange, an Agent for making payments on, and transfers
of, New Notes will be maintained in Luxembourg.
CONSENTS
The Company has obtained all necessary consents, approvals and
authorizations in connection with the issue of the New Notes. The issue of the
New Notes was authorized by resolutions of the Board of Directors of the Company
adopted on January 13 and February 20, 1998.
NO MATERIAL CHANGE
Except as disclosed in this Prospectus, there has been no material change
in the financial position of the Company and its subsidiaries since December 31,
1997 and no material adverse change in the financial position or prospects of
the Company and its subsidiaries since December 31, 1997.
LITIGATION
Neither the Company nor any of its subsidiaries or affiliates is involved
in any litigation or arbitration proceedings which relate to claims or amounts
which are material in the context of the issue of the New Notes or that may
have, or have had during the 12 months preceding the date of this Prospectus, a
material adverse effect on the financial position of the Company, nor, so far as
any of them is aware, is any such proceeding pending or threatened.
AUDITORS
The Consolidated Financial Statements of the Company as of December 31,
1997 and 1996 and for each of the three years in the period ended December 31,
1997, have been prepared in accordance with United States generally accepted
accounting principles ("U.S. GAAP") and have been audited by Ernst & Young LLP
in accordance with United States generally accepted auditing standards.
AVAILABLE DOCUMENTS
Copies of the following documents may be obtained free of charge at the
specified office of the Paying and Transfer Agent in Luxembourg.
- the Restated Certificate of Incorporation of the Company;
- the Purchase Agreement and the Registration Rights Agreement relating to
the New Notes; and
- the Indenture relating to the New Notes (which includes the form of the
New Note certificates).
In addition, copies of the most recent consolidated financial statements of
the Company for the preceding financial year, and any interim quarterly
financial statements published by the Company, will be available at the
specified office of the Paying and Transfer Agent in Luxembourg for as long as
the New Notes are listed on the Luxembourg Stock Exchange. The Company publishes
only consolidated financial statements.
Clearing Systems
The New Notes and the Old Notes have been accepted for clearance through
the facilities of Euroclear and Cedel Bank. The ISIN number for the Global Note
representing the Old Notes is XS0085495082 and the Common Code is 008549508. The
ISIN number for the Global Note representing the New Notes is XS0087309976 and
the Common Code is 008730997.
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NOTICES
All notices shall be deemed to have been given upon (i) the mailing by
first class mail, postage prepaid, of such notices to Holders of the New Notes
at their registered addresses as recorded in the Register; and (ii) so long as
the New Notes are listed on the Luxembourg Stock Exchange and it is required by
the rules of the Luxembourg Stock Exchange, publication of such notice to the
Holders of the New Notes in English in a leading newspaper having general
circulation in Luxembourg (which is expected to be the Luxembourg Wort) or, if
such publication is not practicable, in one other leading English language daily
newspaper with general circulation in Europe, such newspaper being published on
each Business Day in morning editions, whether or not it shall be published in
Saturday, Sunday or holiday editions.
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APPENDIX A
CELLULAR TELEPHONE GLOSSARY TERMS
ANALOG: A transmission or switching which is not digital, e.g., the
representation of voice, video or other modulated electrical audio signals which
are not in digital form.
BANDWIDTH: A range of radio frequencies occupied by a modulated carrier
wave, which is assigned to a service or over which a device can operate.
BSC: Base Station Controller. Cellular traffic is collected from a number
of BTSs and routed to a BSC. The BSC allocates radio channels among BTSs,
manages intra-BSC handoffs among the BTSs and interfaces with the MSCs.
CELL SITE: The entire infrastructure and radio equipment associated with a
cellular transmitting and receiving station, including the land, building,
tower, antennas, and electrical equipment.
CELLULAR: A technique used in mobile radio technology to use the same
spectrum several times in one network. Low power radio transmitters are used to
cover a "cell" (i.e., a limited area) so that the frequencies in use can be
reused without interference for other parts of the network.
COLLOCATE EQUIPMENT: Equipment which utilizes an existing
transmitter/receive tower to locate a cellular Base Station. Collocation can
save money and time relative to building a standalone cell site because an
operator can utilize the existing tower, building, power supply arrangements,
and zoning permits.
DCS-1800 (DIGITAL COMMUNICATION SYSTEM): A derivative of the GSM cellular
mobile telephone standard. "1800" refers to the frequency used of 1800 MHz.
DCS-1800 is the European PCN standard.
DECT (DIGITAL ENHANCED CORDLESS TELECOMMUNICATIONS): A radio technology,
using a frequency of 1900 MHz, for access to a private or public
telecommunications network enabling subscribers in urban areas to utilize
cordless equipment, with the same telephone number as their fixed line
telephone, both inside and, within a limited range, outside their home.
DIGITAL: A mode of representing a physical variable such as speech using
digits 0 and 1 only which vary in relation to the variable being represented.
The digits are transmitted in binary form as a series of pulses. Digital
networks are rapidly replacing the older analog ones. They allow for higher
capacity and higher flexibility through the use of computer-related technology
for the transmission and manipulation of telephone calls. Digital systems offer
lower noise interference and can incorporate encryption as a protection for
external interference.
ENCRYPTION: The transformation of information from a readily recognizable
system of coding to an encoded or enciphered system of coding, or vice versa.
GSM: GSM means Global System for Mobile Communications. GSM is a new
digital technology for cellular telephone systems that all EU countries adopted
as a common standard.
INTRA-BSC HANDOFFS: The process of transferring the control of a telephone
call from one BTS to another.
LICENSE: Italy's second GSM cellular license, announced by the Italian
Government in March 1994, and awarded to OPI. The license includes Vatican City
and San Marino. The award of the License to OPI was made official on January 31,
1995.
MOC: The Ministry of Communications (formerly the Ministry of Posts and
Telecommunications) of Italy. The MOC regulates the licensing, construction,
ownership and operation of cellular telephone systems, as well as the grant,
maintenance and renewal of cellular telephone licenses and radio frequency
allocations in Italy.
A-1
<PAGE> 95
MSC: Mobile switching center, or "switch." Each cell is connected by
landlines or microwave to a central switching point or MSC, which controls the
routing of calls. The MSC allows cellular telephone users to move freely from
cell to cell while continuing their calls.
PBX: Private branch exchange.
PSTN: Public switched telephone network. A central switching point or MSC
is connected to the PSTN.
PTT: A country's local telecommunications operator or post office. In most
nations, cellular telephone service has been first introduced by the grant of a
franchise to the PTT.
ROAMING: A function that enables wireless subscribers to use the service
on networks of operators other than the one with which they signed their initial
contract.
SIM CARD/SMART CARD: A subscriber identity module card. GSM subscriber
data is contained on a SIM Card or Smart Card which can be transferred from one
cellular telephone to another.
STET: Italy's government-owned telecommunications company. STET controls
Telecom Italia, Italy's principal telephone operating company.
TRAFFIC: A measure of the number and pattern of telephone conversations.
WIRELINE TELEPHONE: Conventional wired telephone.
A-2
<PAGE> 96
PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY
Cellular Communications International, Inc.
110 East 59th Street
New York, New York 10022
USA
TRUSTEE, PRINCIPAL PAYING AGENT, TRANSFER AGENT AND REGISTRAR
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
USA
PAYING, TRANSFER AND LISTING AGENT
Banque Internationale a Luxembourg
69, route d'Esch
I-1470 Luxembourg
PAYING AGENT
The Chase Manhattan Bank
Trinity Tower
9 Thomas More Street
London E1 9YT
United Kingdom
<TABLE>
<S> <C>
PRINCIPAL EXCHANGE AGENT EXCHANGE AGENT
The Chase Manhattan Bank Chase Manhattan Bank Luxembourg S.A.
Trinity Tower 5 Rue Plaetis
9 Thomas More Street L-2338, Luxembourg
London E1 9YT
United Kingdom
</TABLE>
LEGAL ADVISORS TO THE COMPANY
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
USA
AUDITORS
Ernst & Young LLP
787 Seventh Avenue
New York, New York 10019
USA
<PAGE> 97
======================================================
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE INITIAL PURCHASERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITY OTHER THAN THOSE TO WHICH IT RELATES, NOR DOES IT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE NOTES IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR
TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary.................... 1
The Exchange Offer.................... 3
Risk Factors.......................... 8
Concurrent Offering................... 16
Use of Proceeds....................... 16
The ECU and the EURO.................. 17
Exchange Rates........................ 17
Capitalization........................ 19
Selected Consolidated Financial
Data................................ 20
Business.............................. 22
Management............................ 37
Security Ownership of Principal
Stockholders and Management......... 39
Description of the Notes.............. 41
Description of Certain Indebtedness... 71
The Exchange Offer.................... 72
Certain United States Federal Income
Tax Considerations.................. 79
Plan of Distribution.................. 84
Legal Matters......................... 84
Experts............................... 84
General Listing Information........... 86
Cellular Telephone Glossary Terms..... A-1
</TABLE>
UNTIL AUGUST 11, 1998 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE NEW NOTES, WHETHER OR NOT PARTICIPATING IN THE
EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
======================================================
======================================================
EURO 235,000,000
[CELLULAR COMMUNICATIONS INTERNATIONAL, INC. LOGO]
9 1/2% SENIOR DISCOUNT
NOTES DUE 2005
------------------------
PROSPECTUS
------------------------
, 1998
======================================================
<PAGE> 98
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Restated Certificate provides to the fullest extent provided by law a
director will not be personally liable for monetary damages to the Company or
its stockholders for, or with respect to, any acts or omissions in the
performance of his or her duties, except for liability, (i) for any breach of
the director's duty of loyalty to such corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for unlawful payments of dividends or unlawful
stock repurchases or redemption as provided in Section 194 of the DGCL or (iv)
for any transaction from which the director derived an improper personal
benefit.
This provision is intended to afford directors additional protection and
limit their potential liability from suits alleging a breach of the duty of care
by a director. As a result of the inclusion of such a provision, stockholders
may be unable to recover monetary damages against directors for actions taken by
them that constitute negligence or gross negligence or that are otherwise in
violation of their fiduciary duty of care, although it may be possible to obtain
injunctive or other equitable relief with respect to such actions. If equitable
remedies are found not to be available to stockholders in any particular
situation, stockholders may not have an effective remedy against a director in
connection with such conduct.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The By-laws provides that directors and officers of the Company shall be
indemnified against liabilities arising from their service as directors and
officers to the full extent permitted by law. Section 145 of the DGCL empowers a
corporation to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation or enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in, or not opposed to, the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
Section 145 also empowers a corporation to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that such person acted in any of the
capacities set forth above, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted under similar standards, except
that no indemnification may be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the corporation
unless, and only to the extent that, the Court of Chancery or the court in which
such action was brought shall determine that despite the adjudication of
liability such person is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper.
Section 145 further provides that to the extent that a director or officer
of a corporation has been successful in the defense of any action, suit or
proceeding referred to above or in the defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive of any
other rights to which the indemnified party may be entitled; and that the
corporation is empowered to purchase and maintain insurance on behalf of a
director or officer of the corporation against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liabilities under Section 145.
II-1
<PAGE> 99
In addition, the Registration Rights Agreement, the form of which is filed
as an exhibit hereto, contains provisions for indemnification by the Initial
Purchasers of Cellular Communications International, Inc. and their respective
officers, directors, and controlling stockholders against certain liabilities
under the Securities Act of 1933, as amended.
ITEM 21. EXHIBITS
A list of exhibits included as part of the Registration Statement is set
forth below:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
1 Purchase Agreement, dated March 11, 1998, by and among the
Company, Donaldson, Lufkin & Jenrette Securities
Corporation, Donaldson, Lufkin & Jenrette International and
Wasserstein Perella Securities, Inc. with respect to the Old
Notes.**
3.1 Restated Certificate of Incorporation of the Company
(Incorporated by reference to
Exhibit 3.1, 1991 Form 10-K, File No. 0-19363).
3.2(a) Certificate of Designation of Series A Junior Participating
Preferred Stock (Incorporated by reference to Exhibit
3.1(a), 1991 Form 10-K, File No. 0-19363).
3.2(b) Certificate of Designation of Series B Preferred Stock
(Incorporated by reference to Exhibit 3.1(c), File No.
33-90980).
3.3 Amended By-Laws of the Company (Incorporated by reference to
Exhibit 3.2, file No. 33-38398).
4.1 Indenture, dated as of March 18, 1998 between the Company
and the Chase Manhattan Bank, as Trustee.*
4.2 Registration Rights Agreement, dated March 18, 1998, between
the Company and Donaldson, Lufkin & Jenrette Securities
Corporation, Donaldson, Lufkin & Jenrette International and
Wasserstein Perella Securities, Inc.**
4.3 Form of 9 1/2% Senior Discount Note due 2005 (included in
Exhibit 4.1.)*
4.4 Indenture, dated as of August 22, 1995, between CCII and
Chemical Bank as Trustee (Incorporated by reference to
Exhibit 4.2, File No. 33-90980).
4.5 First Supplemental Indenture, dated as of February 23, 1998,
to Indenture dated as of August 22, 1998 (Incorporated by
reference to Exhibit 4.4(a), 1997 Form 10-K, File No.
0-19363).
5 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
concerning the Notes being registered hereby.**
10.1 Description of Omnitel Joint Venture Agreement (Incorporated
by reference to Exhibit 10.1, 1996 Form 10-K, File No.
0-19363).
10.2 Compensation Plan Agreements, as amended and restated
effective June 3, 1997 (Incorporated by reference to Exhibit
10.2, 1997 Form 10-K, File No. 0-19363).
10.3 Warrant Agreement between the Company and CCII Funding, Inc.
(Incorporated by reference to Exhibit 10.10, File No.
33-90980).
11 Statement re: Computation of ratios (Incorporated by
reference to Exhibit 4.4(a), 1997 Form 10-K, File No.
0-19363).
23.1 Consent of Ernst & Young LLP.*
23.2 Consent of Coopers & Lybrand S.p.A.*
23.3 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 5).**
24 Power of Attorney (appearing on pages II-5 and II-6 hereof).
25 Form T-1 Statement of Eligibility of The Chase Manhattan
Bank, Trustee.**
99.1 Form of Letter of Transmittal.**
99.2 Form of Notice of Guaranteed Delivery.**
99.3 Form of Letter to Clients.**
99.4 Form of Letter to Brokers, Dealers, Trust Companies and
Other Nominees.**
</TABLE>
- ------------------------------
* previously filed
** filed herewith
II-2
<PAGE> 100
ITEM 22. UNDERTAKINGS
The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933, as amended (the "Securities Act"), (ii) to reflect in the
Prospectus any facts or events arising after the effective date of the
Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration Statement, and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the foregoing provisions, or otherwise, the Registrants
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrants of expenses incurred
or paid by a director, officer or controlling person of the Registrants in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrants will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned Registrants hereby undertake that for the purposes of
determining any liability under the Securities Act, each filing of the
registrants' annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended, (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934, as amended, that is incorporated by reference
in the Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned Registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
The undersigned Registrants hereby undertake to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Trust
Indenture Act.
II-3
<PAGE> 101
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL
OF THE REQUIREMENTS FOR FILING ON FORM S-4 AND HAS DULY CAUSED THIS 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 MAY 12, 1998.
CELLULAR COMMUNICATIONS INTERNATIONAL,
INC.
By: /s/ WILLIAM GINSBERG
------------------------------------
William B. Ginsberg
Chairman of the Board, President
and Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES CAPACITY DATE
<C> <S> <C>
/s/ WILLIAM GINSBERG Chairman of the Board, President and Chief May 12, 1998
- ------------------------------------------ Executive Officer (Principal Executive
William B. Ginsberg Officer)
* Vice President and Chief Financial Officer May 12, 1998
- ------------------------------------------ (Principal Financial Officer)
Stanton N. Williams
* Vice President -- Controller (Principal May 12, 1998
- ------------------------------------------ Accounting Officer)
Gregg Gorelick
* Executive Vice President, Chief Operating May 12, 1998
- ------------------------------------------ Officer and Director
J. Barclay Knapp
* Director May 12, 1998
- ------------------------------------------
Sidney R. Knafel
* Director May 12, 1998
- ------------------------------------------
Del Mintz
* Director May 12, 1998
- ------------------------------------------
Alan J. Patricof
* Director May 12, 1998
- ------------------------------------------
Warren Potash
*By: /s/ WILLIAM GINSBERG
------------------------------------
William B. Ginsberg
Attorney-in-fact
</TABLE>
II-4
<PAGE> 102
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGES
<S> <C> <C>
1 Purchase Agreement, dated March 11, 1998, by and among the
Company, Donaldson, Lufkin & Jenrette Securities
Corporation, Donaldson, Lufkin & Jenrette International and
Wasserstein Perella Securities, Inc. with respect to the Old
Notes.**
3.1 Restated Certificate of Incorporation of the Company
(Incorporated by reference to
Exhibit 3.1, 1991 Form 10-K, File No. 0-19363).
3.2(a) Certificate of Designation of Series A Junior Participating
Preferred Stock (Incorporated by reference to Exhibit
3.1(a), 1991 Form 10-K, File No. 0-19363).
3.2(b) Certificate of Designation of Series B Preferred Stock
(Incorporated by reference to Exhibit 3.1(c), File No.
33-90980).
3.3 Amended By-Laws of the Company (Incorporated by reference to
Exhibit 3.2, file No. 33-38398).
4.1 Indenture, dated as of March 18, 1998 between the Company
and the Chase Manhattan Bank, as Trustee.*
4.2 Registration Rights Agreement, dated March 18, 1998, between
the Company and Donaldson, Lufkin & Jenrette Securities
Corporation, Donaldson, Lufkin & Jenrette International and
Wasserstein Perella Securities, Inc.**
4.3 Form of 9 1/2% Senior Discount Note due 2005 (included in
Exhibit 4.1).*
4.4 Indenture, dated as of August 22, 1995, between CCII and
Chemical Bank as Trustee (Incorporated by reference to
Exhibit 4.2, File No. 33-90980).
4.5 First Supplemental Indenture, dated as of February 23, 1998,
to Indenture dated as of August 22, 1998 (Incorporated by
reference to Exhibit 4.4(a), 1997 Form 10-K, File No.
0-19363).
5 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
concerning the Notes being registered hereby.**
10.1 Description of Omnitel Joint Venture Agreement (Incorporated
by reference to Exhibit 10.1, 1996 Form 10-K, File No.
0-19363).
10.2 Compensation Plan Agreements, as amended and restated
effective June 3, 1997 (Incorporated by reference to Exhibit
10.2, 1997 Form 10-K, File No. 0-19363).
10.3 Warrant Agreement between the Company and CCII Funding, Inc.
(Incorporated by reference to Exhibit 10.10, File No.
33-90980).
11 Statement re: Computation of ratios (Incorporated by
reference to Exhibit 4.4(a), 1997 Form 10-K, File No.
0-19363).
23.1 Consent of Ernst & Young LLP.*
23.2 Consent of Coopers & Lybrand S.p.A.*
23.3 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 5).**
24 Power of Attorney (appearing on pages II-5 and II-6 hereof).
25 Form T-1 Statement of Eligibility of The Chase Manhattan
Bank, Trustee.**
99.1 Form of Letter of Transmittal.**
99.2 Form of Notice of Guaranteed Delivery.**
99.3 Form of Letter to Clients.**
99.4 Form of Letter to Brokers, Dealers, Trust Companies and
Other Nominees.**
</TABLE>
- ------------------------------
* previously filed
** filed herewith
<PAGE> 1
Execution Copy
CELLULAR COMMUNICATIONS INTERNATIONAL, INC.
EURO 235,000,000 9-1/2% Series A Senior Discount Notes due 2005
$75,000,000 Principal Amount 6% Convertible Subordinated Notes due 2005
PURCHASE AGREEMENT
March 11, 1998
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL
WASSERSTEIN PERELLA SECURITIES, INC.
<PAGE> 2
EURO 235,000,000 9-1/2% Series A Senior Discount Notes due 2005
$75,000,000 Principal Amount 6% Convertible Subordinated Notes due 2005
of
CELLULAR COMMUNICATIONS INTERNATIONAL, INC.
PURCHASE AGREEMENT
March 11, 1998
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL
WASSERSTEIN PERELLA SECURITIES, INC.
c/o Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
Cellular Communications International, Inc., a Delaware corporation
(the "Company"), proposes to issue and sell (i) to Donaldson, Lufkin & Jenrette
Securities Corporation, Donaldson, Lufkin & Jenrette International and
Wasserstein Perella Securities, Inc. an aggregate of EURO 235,000,000 in
principal amount at maturity of its 9-1/2% Series A Senior Discount Notes due
2005 (the "Series A Discount Notes") to be issued pursuant to the provisions of
an indenture (the "Discount Indenture"), to be dated as of the Closing Date (as
defined below), between the Company and The Chase Manhattan Bank, as trustee
(the "Discount Trustee") and (ii) to Donaldson, Lufkin & Jenrette Securities
Corporation and Wasserstein Perella Securities, Inc. an aggregate of $75,000,000
in principal amount of its 6% Convertible Subordinated Notes due 2005 (the "Firm
Notes") to be issued pursuant to the provisions of an indenture (the
"Convertible Indenture" and, together with the Discount Indenture, the
"Indentures"), to be dated as of the Closing Date, between the Company and The
Chase Manhattan Bank, as trustee (the "Convertible Trustee"), subject to the
terms and conditions set forth herein. The Company also proposes to issue and
sell to the Initial Purchasers not more than an additional $11,250,000 principal
amount of its 6% Convertible
1
<PAGE> 3
Subordinated Notes due 2005 (the "Additional Notes"), if requested by the
Initial Purchasers as provided in Section 2 hereof.
The Series A Discount Notes and the Series B Discount Notes (as
defined below) issuable in exchange therefor are collectively referred to herein
as the "Discount Notes." The Firm Notes and the Additional Notes are herein
collectively referred to as the "Convertible Notes" and the Convertible Notes
and the Discount Notes are herein collectively referred to as the "Notes."
Pursuant to the terms of the Convertible Indenture, the Convertible Notes will
be convertible at the option of the holders thereof into shares of the Company's
common stock, par value $.01 per share (the "Common Stock"). The Convertible
Notes and the Common Stock issuable upon conversion of the Convertible Notes are
herein collectively referred to as the "Convertible Securities." The Notes and
the Common Stock issuable upon conversion of the Convertible Notes are herein
collectively referred to as the "Securities". With respect to the Discount
Notes, references to the "Initial Purchasers" shall mean Donaldson, Lufkin &
Jenrette Securities Corporation, Donaldson, Lufkin & Jenrette International and
Wasserstein Perella Securities, Inc. and with respect to the Convertible Notes,
references to the "Initial Purchasers" shall mean Donaldson, Lufkin & Jenrette
Securities Corporation and Wasserstein Perella Securities, Inc.
1. Offering Memoranda. The Series A Discount Notes and the
Convertible Notes will be offered and sold to the Initial Purchasers pursuant to
one or more exemptions from the registration requirements under the Securities
Act of 1933, as amended (the "Act"). The Company has prepared a preliminary
offering memorandum relating to each of the Series A Discount Notes and the
Convertible Notes, each dated February 24, 1998 (the "Preliminary Offering
Memoranda") and a final offering memorandum relating to each of the Series A
Discount Notes and the Convertible Notes, each dated March 11, 1998 (the
"Offering Memoranda").
Upon original issuance thereof, and until such time as the same is
no longer required pursuant to the Discount Indenture and the Convertible
Indenture (together, the "Indentures"), the Series A Discount Notes (and all
securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) and the Convertible Notes shall bear the following legend:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A OR
REGULATION S THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY
AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE
RESOLD, PLEDGED OR
2
<PAGE> 4
OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE THE UNITED STATES TO A PERSON
WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 904 UNDER THE SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF THE SECURITIES
ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR") THAT, PRIOR TO SUCH TRANSFER,
FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND,
IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF
SECURITIES LESS THAN $100,000, AN OPINION OF COUNSEL THAT SUCH TRANSFER IS
IN COMPLIANCE WITH THE SECURITIES ACT OR (e) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE
COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE."
2. Agreements to Sell and Purchase. (a) On the basis of the
representations, warranties and covenants contained in this Agreement, and
subject to the terms and conditions contained herein, the Company agrees to
issue and sell to the Initial Purchasers, and each of the Initial Purchasers
agrees, severally and not jointly, to purchase from the Company, (i) an
aggregate principal amount of EURO 235,000,000 at maturity of Series A Discount
Notes set forth opposite its name as set forth on Schedule A hereto at a
purchase price equal to 60.581% of the principal amount at maturity thereof (the
"Discount Purchase Price") and (ii) the principal amount of Firm Notes set forth
opposite its name as set forth on Schedule A hereto at a purchase price equal to
96-3/4% of the principal amount thereof (the "Convertible Purchase Price" and,
together with the Discount Purchase Price, the "Purchase Price").
(b) On the basis of the representations and warranties
contained in this Agreement, and subject to its terms and conditions, (i) the
Company agrees to issue and sell the Additional Notes and (ii) the Initial
Purchasers shall have a right, but not the obligation, to purchase the
Additional Notes from the Company at the Convertible Purchase Price. Additional
Notes may be purchased solely for the purpose of covering over-allotments made
in connection with the Offering of the Firm Notes. The Initial Purchasers may
exercise their right to purchase Additional Notes in whole or in part from time
to
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<PAGE> 5
time by giving written notice thereof to the Company at any time within 30 days
after the date of this Agreement. Donaldson, Lufkin & Jenrette Securities
Corporation shall give any such notice on behalf of the Initial Purchasers and
such notice shall specify the aggregate principal amount of Additional Notes to
be purchased pursuant to such exercise and the date for payment and delivery
thereof. The date specified in any such notice shall be a business day (i) no
earlier than the Closing Date (as hereinafter defined), (ii) no later than ten
business days after such notice has been given and (iii) no earlier than two
business days after such notice has been given. If any Additional Notes are to
be purchased, each Initial Purchaser, severally and not jointly, agrees to
purchase from the Company the principal amount of Additional Notes which bears
the same proportion to the total principal amount of Additional Notes to be
purchased from the Company as the principal amount of Firm Notes set forth
opposite the name of such Initial Purchaser in Schedule A bears to the total
principal amount of Firm Notes.
3. Terms of Offering. The Initial Purchasers have advised the
Company that the Initial Purchasers will make offers (the "Exempt Resales") of
the Series A Discount Notes and the Convertible Notes purchased hereunder on the
terms set forth in the Offering Memoranda, as amended or supplemented, solely to
(i) persons whom the Initial Purchasers reasonably believe to be "qualified
institutional buyers" as defined in Rule 144A under the Act ("QIBs") and (ii) in
connection with the Series A Discount Notes, to non-U.S. persons permitted to
purchase the Series A Discount Notes in offshore transactions in reliance upon
Regulation S under the Act (each, a "Regulation S Purchaser") (such persons
specified in clauses (i) and (ii) being referred to herein as the "Eligible
Purchasers"). The Initial Purchasers have advised the Company that the Initial
Purchasers will make offers pursuant to Regulation S only to QIBs. The Initial
Purchasers will offer the Series A Discount Notes and the Convertible Notes to
Eligible Purchasers initially at a price equal to 99-3/4% of the principal
amount at maturity, in the case of the Series A Discount Notes, and 99-3/4% of
the principal amount, in the case of the Convertible Discount Notes. Such prices
may be changed at any time without notice.
Holders (including subsequent transferees) of the Series A Discount
Notes and the Convertible Securities will have the registration rights set forth
in the Senior Discount Note Registration Rights Agreement and Convertible
Subordinated Note Registration Rights Agreement, as applicable, (collectively
the "Registration Rights Agreements" and, individually, the "Registration Rights
Agreement"), to be dated the Closing Date, in substantially the form of Exhibit
A-1 and A-2 hereto, for so long as the Series A Discount Notes and the
Convertible Securities constitute "Transfer Restricted Securities" (as defined
in the Registration Rights Agreements). Pursuant to the applicable Registration
Rights Agreement, the Company will agree to file with the Securities and
Exchange Commission (the "Commission") under the circumstances set forth
therein, (i) a registration statement under the Act (the "Exchange Offer
Registration Statement") relating to the Company's 9-1/2% Series B Senior
Discount Notes due 2005 (the "Series B Discount Notes "), to be offered in
exchange for the Series A Discount Notes (such offer to exchange being referred
to as the "Exchange Offer") and (ii) a shelf registration statement pursuant to
Rule 415 under the Act (the "Discount Shelf Registration Statement" and,
together with the Exchange Offer Registration Statement, the "Discount
Registration Statements") relating to the resale by certain holders of the
Series A Discount Notes and to use its best efforts to cause such Discount
Registration Statements to be declared and remain effective and usable for the
periods specified in the
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<PAGE> 6
respective Registration Rights Agreement and to consummate the Exchange Offer.
In addition, pursuant to the Registration Rights Agreement, the Company will
agree to file with the Commission under the circumstances set forth therein a
shelf registration statement pursuant to Rule 415 under the Act (the
"Convertible Registration Statement" and, together with the Discount
Registration Statement, the "Registration Statements.") relating to the resale
by certain holders of the Convertible Securities and to use its best efforts to
cause such Registration Statements to be declared and remain effective and
usable for the periods specified in the respective Registration Rights
Agreement. This Agreement, the Indentures, the Notes, and the Registration
Rights Agreement are hereinafter sometimes referred to collectively as the
"Operative Documents."
4. Delivery and Payment.
(a) Delivery to the Initial Purchasers of, and payment of the
Purchase Price for, the Series A Discount Notes and the Firm Notes shall be made
at the offices of Latham & Watkins or such other location as may be mutually
acceptable. Such delivery and payment shall be made at 9:00 a.m. New York City
time, on March 18, 1998 or at such other time on the same date or such other
date as shall be agreed upon by the Initial Purchasers and the Company in
writing. The time and date of such delivery and the payment for the Series A
Discount Notes and the Firm Notes are herein called the "Closing Date."
(b) Delivery to the Initial Purchasers of, and payment for,
any Additional Notes to be purchased by the Initial Purchasers shall be made at
the offices of Latham & Watkins at 9:00 a.m. New York City time, on the date
specified in the exercise notice given by the Initial Purchasers pursuant to
Section 2(b) hereof or such other time on the same or such other date as the
Initial Purchasers and the Company shall agree in writing. The time and date of
delivery and payment for any Additional Notes are hereinafter referred to as an
"Option Closing Date".
(c) One Series A Discount Note in definitive global form,
registered in the name of Chase Manhattan Bank London, as common depositary for
Euroclear System and Cedel Bank societe anonyme, having an aggregate principal
amount at maturity corresponding to the aggregate principal amount of the Series
A Discount Notes (the "Global Discount Note"), shall be delivered by the Company
to the Initial Purchasers (or as the Initial Purchasers direct) in each case
with any transfer taxes thereon duly paid by the Company against payment by the
Initial Purchasers of the Purchase Price thereof by wire transfer in same day
funds to the order of the Company. The Global Discount Note shall be made
available to the Initial Purchasers for inspection not later than 9:30 a.m., New
York City time, on the business day immediately preceding the Closing Date.
(d) One or more of the Convertible Notes in definitive global
form, registered in the name of Cede & Co., as nominee of the Depository Trust
Company ("DTC"), having an aggregate principal amount at maturity corresponding
to the aggregate principal amount of the Convertible Notes, as appropriate (the
"Global Convertible Note") and, together with the Global Discount Note, the
"Global Notes"), shall be delivered by the Company to the Initial Purchasers (or
as the Initial Purchasers direct) in each case with any transfer taxes thereon
duly paid by the Company against payment by the Initial
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<PAGE> 7
Purchasers of the Purchase Price thereof by wire transfer in same day funds to
the order of the Company. The Global Notes shall be made available to the
Initial Purchasers for inspection not later than 9:3- a.m., New York City time,
on the business day immediately preceding the Closing Date.
5. Agreements of the Company. The Company hereby agrees with the
Initial Purchasers as follows:
(a) To advise the Initial Purchasers promptly and, if
requested by the Initial Purchasers, confirm such advice in writing, (i) of the
issuance by any state securities commission of any stop order suspending the
qualification or exemption from qualification of any Series A Discount Notes or
Convertible Notes for offering or sale in any jurisdiction designated by the
Initial Purchasers pursuant to Section 5(e) hereof, or the initiation of any
proceeding by any state securities commission or any other federal or state
regulatory authority for such purpose and (ii) of the happening of any event
during the period referred to in Section 5(c) below that makes any statement of
a material fact made in the Preliminary Offering Memoranda or the Offering
Memoranda untrue or that requires any additions to or changes in the Preliminary
Offering Memoranda or the Offering Memoranda in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Company shall use its best efforts to prevent the issuance of
any stop order or order suspending the qualification or exemption of any Series
A Discount Notes or Convertible Notes under any state securities or Blue Sky
laws and, if at any time any state securities commission or other federal or
state regulatory authority shall issue an order suspending the qualification or
exemption of any Series A Discount Notes or Convertible Notes under any state
securities or Blue Sky laws, the Company shall use its best efforts to obtain
the withdrawal or lifting of such order at the earliest possible time.
(b) To furnish the Initial Purchasers and those persons
identified by the Initial Purchasers to the Company as many copies of the
Preliminary Offering Memoranda and the Offering Memoranda, and any amendments or
supplements thereto, as the Initial Purchasers may reasonably request for the
time period specified in Section 5(c) hereof. Subject to the Initial Purchasers'
compliance with their representations and warranties and agreements set forth in
Section 7 hereof, the Company consents to the use of the Preliminary Offering
Memoranda and the Offering Memoranda, any documents incorporated by reference
therein, and any amendments and supplements thereto required pursuant hereto, by
the Initial Purchasers in connection with Exempt Resales.
(c) During such period as in the opinion of counsel for the
Initial Purchasers an Offering Memoranda is required by law to be delivered in
connection with Exempt Resales by the Initial Purchasers and in connection with
market-making activities of the Initial Purchasers for so long as any Series A
Discount Notes or Convertible Notes are outstanding, (i) not to make any
amendment or supplement to the Offering Memoranda of which the Initial
Purchasers shall not previously have been advised or to which the Initial
Purchasers shall reasonably object after being so advised and (ii) to prepare
promptly upon the Initial Purchasers' reasonable request, any amendment or
supplement to the Offering
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<PAGE> 8
Memoranda which may be necessary or advisable in connection with such Exempt
Resales or such market-making activities.
(d) If, during the period referred to in Section 5(c) above,
any event shall occur or condition shall exist as a result of which, in the
opinion of counsel to the Initial Purchasers, it becomes necessary to amend or
supplement the Offering Memoranda in order to make the statements therein, in
the light of the circumstances when such Offering Memoranda is delivered to an
Eligible Purchaser, not misleading, or if, in the opinion of counsel to the
Initial Purchasers, it is necessary to amend or supplement either one or both of
the Offering Memoranda to comply with any applicable law, forthwith to prepare
an appropriate amendment or supplement to such Offering Memorandum so that the
statements therein, as so amended or supplemented, will not, in the light of the
circumstances when it is so delivered, be misleading, or so that such Offering
Memorandum will comply with applicable law, and to furnish to the Initial
Purchasers and such other persons as the Initial Purchasers may designate such
number of copies thereof as the Initial Purchasers may reasonably request.
(e) Prior to the sale of all Series A Discount Notes and
Convertible Notes pursuant to Exempt Resales as contemplated hereby, to
cooperate with the Initial Purchasers and counsel to the Initial Purchasers in
connection with the registration or qualification of the Series A Discount Notes
for offer and sale to the Initial Purchasers and pursuant to Exempt Resales
under the securities or Blue Sky laws of such jurisdictions as the Initial
Purchasers may request and to continue such registration or qualification in
effect so long as required for Exempt Resales and to file such consents to
service of process or other documents as may be necessary in order to effect
such registration or qualification; provided, that the Company shall not be
required in connection therewith to qualify as a foreign corporation in any
jurisdiction in which it is not now so qualified or to take any action that
would subject it to general consent to service of process or taxation other than
as to matters and transactions relating to the Preliminary Offering Memoranda,
the Offering Memoranda or Exempt Resales, in any jurisdiction in which it is not
now so subject.
(f) So long as the Notes are outstanding, (i) to mail and make
generally available as soon as practicable after the end of each fiscal year to
the record holders of the Notes a financial report of the Company and its
subsidiaries on a consolidated basis (and a similar financial report of all
unconsolidated subsidiaries, if any), all such financial reports to include a
consolidated balance sheet, a consolidated statement of operations, a
consolidated statement of cash flows and a consolidated statement of
shareholders' equity as of the end of and for such fiscal year, together with
comparable information as of the end of and for the preceding year, certified by
the Company's independent public accountants and (ii) to mail and make generally
available as soon as practicable after the end of each quarterly period (except
for the last quarterly period of each fiscal year) to such holders, a
consolidated balance sheet, a consolidated statement of operations and a
consolidated statement of cash flows (and similar financial reports of all
unconsolidated subsidiaries, if any) as of the end of and for such period, and
for the period from the beginning of such year to the close of such quarterly
period, together with comparable information for the corresponding periods of
the preceding year.
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<PAGE> 9
(g) For so long as the Notes are outstanding, (i) to use its
reasonable efforts to mail and make generally available on a timely basis after
the end of each fiscal year to the record holders of the Notes a consolidated
financial report of each of Omnitel-Sistemi Radiocellulari Italiani S.p.A.
("Omnitel") and Omnitel Pronto Italia S.p.A. ("OPI" and, together with Omnitel,
the "Affiliates" and together with Omnitel, the Company and its subsidiaries,
the "Corporations") on a consolidated basis, all such financial reports to
include a condensed balance sheet, a condensed statement of income, a condensed
statement of cash flows and a condensed statement of stockholders' equity as of
the end of and for such fiscal year, together with comparable information as of
the end of and for the preceding year, certified by each of such Affiliate's
independent auditors and (ii) to mail and make generally available as soon as
practicable after the end of each quarterly period (except for the last
quarterly period of each fiscal year) to such holders, a condensed balance
sheet, a condensed statement of operations and a condensed statement of cash
flows (and similar financial reports of all unconsolidated subsidiaries, if any)
as of the end of and for such period, and for the period from the beginning of
such year to the close of such quarterly period, together with comparable
information for the corresponding periods of the preceding year.
(h) So long as the Notes are outstanding, to furnish to the
Initial Purchasers as soon as available copies of all reports or other
communications furnished by the Company to its security holders or furnished to
or filed with the Commission or any national securities exchange on which any
class of securities of the Company is listed and such other publicly available
information concerning the Company, and/or its subsidiaries as the Initial
Purchasers may reasonably request.
(i) So long as any of the Notes remain outstanding and during
any period in which the Company is not subject to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), to make
available to any holder of Securities in connection with any sale thereof and
any prospective purchaser of such Securities from such holder, the information
("Rule 144A Information") required by Rule 144A(d)(4) under the Act.
(j) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or cause to be
paid all reasonable expenses incident to the performance of the obligations of
the Company under this Agreement, including: (i) the fees, disbursements and
expenses of the counsel to the Company and accountants of the Company and each
of the Affiliates in connection with the sale and delivery of the Series A
Discount Notes and the Convertible Notes to the Initial Purchasers and pursuant
to Exempt Resales, and all other fees and expenses in connection with the
preparation, printing, filing and distribution of the Preliminary Offering
Memoranda, the Offering Memoranda and all amendments and supplements to any of
the foregoing (including financial statements), including the mailing and
delivering of copies thereof to the Initial Purchasers and persons designated by
it in the quantities specified herein, (ii) all costs and expenses related to
the transfer and delivery of the Series A Discount Notes and the Convertible
Notes to the Initial Purchasers and pursuant to Exempt Resales, including any
transfer or other taxes payable thereon, (iii) all costs of printing or
producing this Agreement, the other Operative Documents and any other agreements
or documents in connection with the offering, purchase, sale or delivery of the
Series A Discount Notes or Convertible Notes, (iv) all reasonable expenses in
connection with the registration or qualification of the Series A Discount Notes
or
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<PAGE> 10
the Convertible Securities for offer and sale under the securities or Blue Sky
laws of the several states and all costs of printing or producing any
preliminary and supplemental Blue Sky Memoranda in connection therewith
(including the filing fees and fees and reasonable disbursements of counsel for
the Initial Purchasers in connection with such registration or qualification and
memoranda relating thereto), (v) the cost of printing certificates representing
the Series A Discount Notes and the Convertible Securities, (vi) all expenses
and listing fees in connection with the application for quotation of the
Convertible Notes in the National Association of Securities Dealers, Inc.
("NASD") Automated Quotation System PORTAL ("PORTAL"), (vii) the fees and
expenses of the Discount Trustee, the Convertible Trustee and such Trustees'
counsel in connection with the Indentures and the Notes, (viii) the costs and
charges of any transfer agent, registrar and/or depositary (including DTC), (ix)
any fees charged by rating agencies for the rating of the Notes, (x) all costs
and expenses of the Exchange Offer and any Registration Statements, as set forth
in the Convertible Subordinated Note Registration Rights Agreement and/or the
Senior Discount Note Registration Rights Agreement, and (xi) and all other costs
and expenses incident to the performance of the obligations of the Company
hereunder for which provision is not otherwise made in this Section 5.
(k) To use its best efforts to effect the inclusion of the
Series A Discount Notes and the Convertible Notes in PORTAL and to maintain the
listing of the Series A Discount Notes and the Convertible Notes on PORTAL for
so long as the Series A Discount Notes and Convertible Notes are outstanding.
(l) To use its best efforts to obtain the approval of DTC for
"book-entry" transfer of the Notes, and to comply with all of its agreements set
forth in the representation letters of the Company to DTC relating to the
approval of the Notes by DTC for "book-entry" transfer.
(m) During the period beginning on the date hereof and
continuing to and including the Closing Date, not to offer, sell, contract to
sell or otherwise transfer or dispose of any debt securities of the Company or
any warrants, rights or options to purchase or otherwise acquire debt securities
of the Company substantially similar to the Notes (other than (i) the Notes and
(ii) commercial paper issued in the ordinary course of business), without the
prior written consent of the Initial Purchasers.
(n) To use its best efforts to cause the Common Stock issuable
upon conversion of the Convertible Notes to be duly included for quotation on
the Nasdaq Stock Market's National Market (the "Nasdaq National Market") prior
to the Firm Closing Date subject to notice of official issuance. The Company
will ensure that such Common Stock remain included for quotation on the Nasdaq
National Market or any other national securities exchange following the Firm
Closing Date for so long as any shares of Common Stock remain registered under
the Exchange Act.
(o) The Company shall not (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, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock or
(ii) enter into any swap or other arrangement that transfers all or a portion of
the economic consequences associated with the
9
<PAGE> 11
ownership of any Common Stock (regardless of whether any of the transactions
described in clause (i) or (ii) is to be settled by the delivery of Common
Stock, or such other securities, in cash or otherwise), except to the Initial
Purchasers pursuant to this Agreement, for a period of 90 days after the Closing
Date without the prior written consent of the Initial Purchasers.
Notwithstanding the foregoing, during such period the Company may (i) grant
employee and non-employee director stock options, (ii) issue the Convertible
Notes, (iii) issue shares of Common Stock in connection with any transaction in
which the Company or any subsidiary of the Company acquires directly or
indirectly, any additional equity interest in OPI, and (iv) issue shares of
Common Stock (a) upon the exercise of an option or warrant or the conversion of
a security outstanding on the date hereof or (b) in connection with any
acquisition of a direct or indirect interest in Omnitel Pronto Italia S.p.A. The
Company also agrees not to file any registration statement with respect to any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock (other than with respect to the Convertible Notes)
for a period of 90 days after the Closing Date without the prior written consent
of the Initial Purchasers.
(p) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act) that
would be integrated with the sale of the Series A Discount Notes or the
Convertible Notes to the Initial Purchasers or pursuant to Exempt Resales in a
manner that would require the registration of any such sale of the Series A
Discount Notes or the Convertible Notes under the Act.
(q) Not to voluntarily claim, and to actively resist any
attempts to claim, the benefit of any usury laws against the holders of any
Notes.
(r) To cause the Exchange Offer to be made in the appropriate
form to permit Series B Discount Notes registered pursuant to the Act to be
offered in exchange for the Series A Discount Notes and to comply with all
applicable federal and state securities laws in connection with the Exchange
Offer.
(s) To comply with all of its agreements set forth in the
Registration Rights Agreement.
(t) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by it prior
to the Closing Date and to satisfy all conditions precedent to the delivery of
the Series A Discount Notes and Convertible Notes.
6. Representations, Warranties and Agreements of the Company. As of
the date hereof, the Company represents and warrants to, and agrees with, the
Initial Purchasers that:
(a) The Preliminary Offering Memoranda and the Offering
Memoranda including documents incorporated by reference therein (the
"Incorporated Documents"), do not, and any supplement or amendment to them will
not, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties
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<PAGE> 12
contained in this paragraph (a) shall not apply to statements in or omissions
from the Preliminary Offering Memoranda that are corrected in the Offering
Memoranda (or any supplement or amendment thereto), or statements or omissions
from the Preliminary Offering Memoranda or the Offering Memoranda (or any
supplement or amendment thereto) based upon information relating to the Initial
Purchasers furnished to the Company in writing by the Initial Purchasers
expressly for use therein. No stop order preventing the use of the Preliminary
Offering Memoranda or the Offering Memoranda, or any amendment or supplement
thereto, or any order asserting that any of the transactions contemplated by
this Agreement are subject to the registration requirements of the Act, has been
issued. The Incorporated Documents, at the time they were or hereafter are filed
or last amended, as the case may be, with the Commission, complied and will
comply in all material respects with the requirements of the Exchange Act.
(b) Each of the Company and its subsidiaries and, to the
knowledge of the Company, the Affiliates, has been duly incorporated or
organized, as applicable, is validly existing in good standing under the laws of
its jurisdiction of incorporation or organization, as applicable, and has the
corporate power and authority to carry on its business as described in the
Preliminary Offering Memoranda and the Offering Memoranda and to own, lease and
operate its properties, and each is duly qualified and is in good standing as a
foreign corporation authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the business, prospects, financial condition or
results of operations of the Company and its subsidiaries and the Affiliates,
taken as a whole, or draw into question the validity of this Agreement or the
Operative Documents (a "Material Adverse Effect").
(c) All outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid, non-assessable
and not subject to any preemptive or similar rights.
(d) The entities listed on Schedule B hereto are the only
subsidiaries, direct or indirect, of the Company. All of the outstanding shares
of capital stock of each of the Company's subsidiaries have been duly authorized
and validly issued and are fully paid and non-assessable, and are owned by the
Company, directly or indirectly through one or more subsidiaries, free and clear
of any security interest, claim, lien, encumbrance or adverse interest of any
nature (each, a "Lien"). No subsidiary listed on Schedule B hereto has (i)
contributed in the last three fiscal years or in the nine months ended September
30, 1997 greater than 5% of the Company's revenues, EBITDA (as defined in the
Offering Memoranda) or net income or (ii) at any of the last two fiscal years or
the nine months ended September 30, 1997, constituted greater than 5% of the
total assets of the Company.
(e) To the knowledge of the Company, all of the issued and
outstanding shares of capital stock of, or other ownership interests in, each of
OPI and Omnitel have been duly authorized and validly issued and, to the extent
disclosed in the Offering Memoranda, are owned directly or indirectly, by the
Company.
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(f) Each of the Omnitel Agreement (as defined in the Offering
Memoranda) and the OPI Agreement (as defined in the Offering Memoranda) conforms
in all material respect to the description thereof contained in the Offering
Memoranda
(g) Each of the Company and its subsidiaries and, to the
knowledge of the Company, the Affiliates has good and marketable title in fee
simple to all real property and good and marketable title to all personal
property owned by such Corporation which is material to its business, in each
case free and clear of all Liens and defects, except such as are described in
the Offering Memoranda or such as do not materially affect the value of such
property and do not materially interfere with the use made and proposed to be
made of such property by such Corporation; and any real property and buildings
held under lease by such Corporation are held by it under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
materially interfere with the use made and proposed to be made of such property
and buildings by such Corporation, in each case except as described in the
Offering Memoranda.
(h) This Agreement has been duly authorized, executed and
delivered by the Company.
(i) The Indentures have been duly authorized by the Company
and, on the Closing Date, will have been validly executed and delivered by the
Company. When the Indentures have been duly executed and delivered by the
Company, the Indentures will be valid and binding agreements of the Company,
enforceable against the Company in accordance with its terms (assuming due
authorization, execution and delivery by each respective Trustee) except as (i)
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other laws affecting
creditors' rights generally and (ii) rights of acceleration and the availability
of equitable remedies (regardless of whether enforcement is considered in a
proceeding at law or in equity) may be limited by equitable principles of
general applicability. On the Closing Date, the Indentures will conform in all
material respects to the requirements of the Trust Indenture Act of 1939, as
amended (the "TIA" or "Trust Indenture Act"), and the rules and regulations of
the Commission applicable to an indenture which is qualified thereunder.
(j) The Series A Discount Notes and the Convertible Notes have
been duly authorized and, on the Closing Date, will have been validly executed
and delivered by the Company. When the Series A Discount Notes and the
Convertible Notes have been issued, executed and authenticated in accordance
with the provisions of the applicable Indenture and delivered to and paid for by
the Initial Purchasers in accordance with the terms of this Agreement, the
Series A Discount Notes and the Convertible Notes will be entitled to the
benefits of the applicable Indenture and will be valid and binding obligations
of the Company, enforceable in accordance with their terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other laws now or hereinafter in effect
affecting creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies (regardless of whether enforcement is
considered in a proceeding at law or in equity) may be limited by equitable
principles of general applicability. On the Closing Date, the
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Series A Discount Notes and the Convertible Notes will conform as to legal
matters to the description thereof contained in the Offering Memoranda.
(k) The Convertible Notes are convertible into Common Stock in
accordance with the terms of the Convertible Indenture; the shares of Common
Stock initially issuable upon conversion of the Convertible Notes have been duly
authorized and reserved for issuance upon such conversion and, when issued upon
such conversion, will be validly issued, fully paid and nonassessable, will
conform to the description thereof contained in the applicable Offering
Memorandum and will be duly authorized for listing on the Nasdaq National
Market, subject to notice of official issuance; the Company has the authorized
and outstanding capital stock as set forth in the Offering Memoranda; and the
stockholders of the Company or other holders of the Company's securities have no
pre-emptive or similar rights with respect to the Convertible Notes or the
Common Stock issuable upon the Convertible Notes.
(l) On the Closing Date, the Series B Discount Notes will have
been duly authorized by the Company. When the Series B Discount Notes are
issued, executed and authenticated in accordance with the terms of the Exchange
Offer and the Discount Indenture, the Series B Discount Notes will be entitled
to the benefits of the Discount Indenture and will be the valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other laws now or hereinafter in effect affecting creditors' rights generally
and (ii) rights of acceleration and the availability of equitable remedies
(regardless of whether enforcement is considered in a proceeding at law or in
equity) may be limited by equitable principles of general applicability.
(m) Each of the Registration Rights Agreement has been duly
authorized by the Company and, on the Closing Date, will have been duly executed
and delivered by the Company. When each of the Registration Rights Agreement has
been duly executed and delivered in accordance with its terms, and (assuming due
authorization, execution, and delivery by you), the Registration Rights
Agreements will be valid and binding agreements of the Company, enforceable
against the Company in accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other laws now or hereinafter in effect
affecting creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies (regardless of whether enforcement is
considered in a proceeding at law or in equity) may be limited by equitable
principles of general applicability. On the Closing Date, the Registration
Rights Agreement will conform as to legal matters to the description thereof in
the Offering Memoranda.
(n) Each of the Company and its subsidiaries and, to the
knowledge of the Company, the Affiliates is not in violation of its respective
charter, by-laws or other organizational documents or in default in the
performance of any obligation, agreement, covenant or condition contained in any
indenture, loan agreement, mortgage, lease or other agreement or instrument that
is material to such Corporation, taken as a whole, to which it is a party or by
which such Company or its property is bound.
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(o) The execution, delivery and performance of this Agreement
and the other Operative Documents by the Company, compliance by the Company with
all provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not (i) require any consent, approval,
authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the securities
or Blue Sky laws of the various states), (ii) conflict with or constitute a
breach of any of the terms or provisions of, or a default under, the charter or
by-laws of the Company or any of its subsidiaries or any indenture, loan
agreement, mortgage, lease or other agreement or instrument that is material to
the Company and its subsidiaries, taken as a whole, to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or their respective property is bound, (iii) violate or conflict
with any applicable law or any rule, regulation, judgment, order or decree of
any court or any governmental body or agency having jurisdiction over the
Company, any of its subsidiaries or their respective property, (iv) result in
the imposition or creation of (or the obligation to create or impose) a Lien
under, any 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 or
their respective property is bound, or (v) result in the termination, suspension
or revocation of any Authorization (as defined below) of the Company or any of
its subsidiaries or result in any other impairment of the rights of the holder
of any such Authorization except, in the case of clause (i), (iii), (iv) or (v),
for any breach, default, violation, conflict, lien, termination, suspension or
revocation that would not have a Material Adverse Effect.
(p) There are no legal or governmental proceedings pending or,
to the Company's knowledge, threatened to which the Company or any of its
subsidiaries or, to the knowledge of the Company, the Affiliates is or could be
a party or to which any of such Corporation's property is or could be subject,
which could reasonably be expected to have, singly or in the aggregate, in a
Material Adverse Effect.
(q) Neither the Company nor any of its subsidiaries nor, to
the knowledge of the Company, the Affiliates, has violated any foreign, federal,
state or local law or regulation relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("Environmental Laws"), any provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or any provisions
of the Foreign Corrupt Practices Act or the rules and regulations promulgated
thereunder, except for such violations which, singly or in the aggregate, would
not have a Material Adverse Effect.
(r) Each of the Company and its subsidiaries and, to the
knowledge of the Company, the Affiliates is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
are reasonably adequate and customary in the businesses in which such
Corporation is engaged.
(s) To the knowledge of the Company, after due inquiry, there
are no costs or liabilities associated with Environmental Laws (including,
without limitation, any capital or operating expenditures required for clean-up,
closure of properties or compliance with Environmental Laws or any
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<PAGE> 16
Authorization (as defined), any related constraints on operating activities and
any potential liabilities to third parties) which would, singly or in the
aggregate, have a Material Adverse Effect.
(t) Each of the Company and its subsidiaries and, to the
knowledge of the Company, the Affiliates has such foreign, federal, state or
local permits, licenses, consents, exemptions, franchises, authorizations and
other approvals (each, an "Authorization") of, and has made all filings with and
notices to, all governmental or regulatory authorities and self-regulatory
organizations and all courts and other tribunals, including without limitation,
any Authorizations required by the Federal Communications Commission, the
Federal Aviation Administration or the Italian Ministry of Posts and
Communications, as are necessary to own, lease, license and operate its
respective properties and to conduct its business, except where the failure to
have any such Authorization or to make any such filing or notice would not,
singly or in the aggregate, have a Material Adverse Effect. Each such
Authorization is valid and in full force and effect and each of the Corporations
is in compliance with all the terms and conditions thereof and with the rules
and regulations of the authorities and governing bodies having jurisdiction with
respect thereto; and no event has occurred (including, without limitation, the
receipt of any notice from any authority or governing body) which allows or,
after notice or lapse of time or both, would allow, revocation, suspension or
termination of any such Authorization or results or, after notice or lapse of
time or both, would result in any other impairment of the rights of the holder
of any such Authorization; and such Authorizations contain no restrictions that
are burdensome to such Corporation; except where such failure to be valid and in
full force and effect or to be in compliance, the occurrence of any such event
or the presence of any such restriction would not, singly or in the aggregate,
have a Material Adverse Effect.
(u) Except as disclosed in the Offering Memoranda, no
relationship, direct or indirect, exists between or among the Company or any of
its subsidiaries on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company or any of its subsidiaries on the other
hand, which would be required by the Act to be described in the Offering
Memoranda if the Offering Memoranda were a prospectus included in a registration
statement on Form S-1 filed with the Commission.
(v) Each of Company and its subsidiaries and, to the knowledge
of the Company, the Affiliates maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(w) The accountants, Ernst & Young LLP, that have certified
the financial statements and supporting schedules thereto of the Company and its
subsidiaries included in the Preliminary Offering Memoranda and the Offering
Memoranda are independent public accountants with respect to the Company and its
subsidiaries, as required by the Act and the Exchange Act. The accountants,
Coopers & Lybrand S.p.A., that have certified the financial statements and
supporting schedules thereto of the
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<PAGE> 17
Affiliates included in the Preliminary Memoranda and the Offering Memoranda are,
to the knowledge of the Company, independent public accountants with respect to
the Affiliates. The historical financial statements, together with related
schedules and notes, set forth in the Preliminary Offering Memoranda and the
Offering Memoranda comply as to form in all material respects with the
requirements applicable to registration statements on Form S-1 under the Act.
(x) The historical financial statements, together with related
schedules and notes forming part of the Offering Memoranda (and any amendment or
supplement thereto), present fairly the consolidated financial position, results
of operations and changes in financial position of the Company, its subsidiaries
and, to the knowledge of the Company, the Affiliates on the basis stated in the
Offering Memoranda at the respective dates or for the respective periods to
which they apply; such statements and related schedules and notes have been
prepared in accordance with generally accepted accounting principles in the
United States consistently applied throughout the periods involved, except as
disclosed therein; and the other financial and statistical information and data
set forth in the Offering Memoranda (and any amendment or supplement thereto),
are, in all material respects, accurately presented and prepared on a basis
consistent with such financial statements and the books and records of the
Corporations.
(y) All material tax returns required to be filed by each of
the Company and its subsidiaries in any jurisdiction have been filed, other than
those filings being contested in good faith, and all material taxes, including
withholding taxes, penalties and interest, assessments, fees and other charges
due pursuant to such returns or pursuant to any assessment received by such
Corporation have been paid, other than those being contested in good faith and
for which adequate reserves have been provided.
(z) The Company is not and, after giving effect to the
offering and sale of the Series A Discount Notes and the Convertible Notes and
the application of the net proceeds thereof as described in the Offering
Memoranda, will not be, an "investment company," as such term is defined in the
Investment Company Act of 1940, as amended.
(aa) There are no contracts, agreements or understandings,
other than those pursuant to the Operative Documents, between the Company and
any person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of the
Company or to require the Company to include such securities with the Notes
registered pursuant to any Registration Statement.
(bb) Neither the Company nor any of its subsidiaries nor any
agent thereof acting on the behalf of them has taken, and none of them will
take, any action that might cause this Agreement or the issuance or sale of the
Series A Discount Notes and the Convertible Notes to violate Regulation G (12
C.F.R. Part 207), Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R.
Part 221) or Regulation X (12 C.F.R. Part 224) of the Board of Governors of the
Federal Reserve System.
(cc) To the knowledge of the Company, after due inquiry, no
action has been taken and no law, statute, rule or regulation or order has been
enacted, adopted or issued by any governmental agency or body which prevents the
execution, delivery and performance of any of the
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<PAGE> 18
Operative Documents, the issuance of the Series A Discount Notes or the
Convertible Notes, or suspends the sale of the Series A Discount Notes or the
Convertible Notes in any jurisdiction referred to in Section 5(e); and, to the
knowledge of the Company, after due inquiry, no injunction, restraining order or
other order or relief of any nature by a federal or state court or other
tribunal of competent jurisdiction has been issued with respect to the Company
which would prevent or suspend the issuance or sale of the Series A Discount
Notes or the Convertible Notes in any jurisdiction referred to in Section 5(e).
(dd) No "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436(g)(2) under the
Act (i) has imposed (or has informed the Company that it is considering
imposing) any condition (financial or otherwise) on the Company's retaining any
rating assigned to the Company, any securities of the Company or (ii) has
indicated to the Company that it is considering (a) the downgrading, suspension,
or withdrawal of, or any review for a possible change that does not indicate the
direction of the possible change in, any rating so assigned or (b) any change in
the outlook for any rating of the Company or any securities of the Company.
(ee) All indebtedness of the Company that will be repaid with
the proceeds of the issuance and sale of the Series A Discount Notes and the
Convertible Notes was incurred, and the indebtedness represented by the Series A
Discount Notes and the Convertible Notes is being incurred, for proper purposes
and in good faith and the Company was, at the time of the incurrence of such
indebtedness that will be repaid with the proceeds of the issuance and sale of
the Series A Discount Notes and the Convertible Notes, and will be on the
Closing Date (after giving effect to the application of the proceeds from the
issuance of the Series A Discount Notes and the Convertible Notes) solvent, and
had at the time of the incurrence of such indebtedness that will be repaid with
the proceeds of the issuance and sale of the Series A Discount Notes and the
Convertible Notes and will have on the Closing Date (after giving effect to the
application of the proceeds from the issuance of the Series A Discount Notes and
the Convertible Notes) sufficient capital for carrying on its business and was,
at the time of the incurrence of such indebtedness that will be repaid with the
proceeds of the issuance and sale of the Series A Discount Notes and the
Convertible Notes, and will be on the Closing Date (after giving effect to the
application of the proceeds from the issuance of the Series A Discount Notes and
the Convertible Notes) able to pay their respective debts as they mature.
(ff) Since the respective dates as of which information is
given in the Offering Memoranda other than as set forth in the Offering
Memoranda (exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), (i) there has not occurred any material adverse change
or any development involving a prospective material adverse change in the
condition, financial or otherwise, or the earnings, business, management or
operations of the Company and its subsidiaries and to the knowledge of the
Company, the Affiliates, taken as a whole, (ii) there has not been any material
adverse change or any development involving a prospective material adverse
change in the capital stock or in the long-term debt of the Company or any of
its subsidiaries or to the knowledge of the Company, the Affiliates, and (iii)
neither the Company nor any of its subsidiaries nor, to the knowledge of the
Company, any of the Affiliates has incurred any material liability or
obligation, direct or contingent.
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(gg) The Securities are eligible for resale pursuant to
Rule 144A and when the Series A Discount Notes and the Convertible Notes are
issued and delivered pursuant to this Agreement, neither the Series A Discount
Notes nor the Convertible Notes will be of the same class (within the meaning of
Rule 144A under the Act) as any security of the Company that is listed on a
national securities exchange registered under Section 6 of the Exchange Act or
that is quoted in a United States automated inter-dealer quotation system.
(hh) No form of general solicitation or general advertising
(as defined in Regulation D under the Act) was used by the Company, or any of
their respective representatives (other than the Initial Purchaser, as to whom
the Company makes no representation) in connection with the offer and sale of
the Series A Discount Notes and the Convertible Notes contemplated hereby,
including, but not limited to, articles, notices or other communications
published in any newspaper, magazine, or similar medium or broadcast over
television or radio, or any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising. No securities of the same
class as the Series A Discount Notes and the Convertible Notes have been issued
and sold by the Company within the six-month period immediately prior to the
date hereof.
(ii) Prior to the effectiveness of any Registration Statement,
the Indentures are not required to be qualified under the Trust Indenture Act of
1939, as amended.
(jj) The Company and its respective affiliates and all persons
acting on their behalf (other than the Initial Purchasers, as to whom the
Company makes no representation) have complied with and will comply with the
offering restrictions requirements of Regulation S in connection with the
offering of the Notes outside the United States and, in connection therewith,
the Offering Memorandum will contain the disclosure required by Rule 902(h).
(kk) Neither of the Company, nor any of its respective
affiliates or any person acting on its behalf (other than the Initial
Purchasers, as to whom the Company makes no representation) has engaged or will
engage in any directed selling efforts within the meaning of Regulation S under
the Act ("Regulation S") with respect to the Series A Discount Notes or the
Convertible Notes.
(ll) No registration under the Act of the Series A Discount
Notes or the Convertible Notes is required for the sale of the Series A Discount
Notes and the Convertible Notes to the Initial Purchasers as contemplated hereby
or for the Exempt Resales assuming the accuracy of the Initial Purchasers'
representations and warranties and agreements set forth in Section 7 hereof.
(mm) Each certificate signed by any officer of the Company and
delivered to the Initial Purchasers or counsel for the Initial Purchasers shall
be deemed to be a representation and warranty by the Company to the Initial
Purchasers as to the matters covered thereby.
The Company acknowledges that the Initial Purchasers and, for
purposes of the opinions to be delivered to the Initial Purchasers pursuant to
Section 9 hereof, counsel to the Company and counsel to
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<PAGE> 20
the Initial Purchasers will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.
7. Initial Purchasers' Representations and Warranties. Each Initial
Purchaser, severally and not jointly, represents and warrants to, and agrees
with, the Company:
(a) Such Initial Purchaser is a QIB, with such knowledge and
experience in financial and business matters as is necessary in order to
evaluate the merits and risks of an investment in the Series A Discount Notes
and the Convertible Notes.
(b) Such Initial Purchaser (A) is not acquiring the Series A
Discount Notes or the Convertible Notes with a view to any distribution thereof
or with any present intention of offering or selling any of the Series A
Discount Notes or the Convertible Notes in a transaction that would violate the
Act or the securities laws of any state of the United States or any other
applicable jurisdiction and (B) will be reoffering and reselling the Series A
Discount Notes and the Convertible Notes only to (x) QIBs in reliance on the
exemption from the registration requirements of the Act provided by Rule 144A,
and (y) in offshore transactions in reliance upon Regulation S under the Act.
(c) Such Initial Purchaser agrees that no form of general
solicitation or general advertising (within the meaning of Regulation D under
the Act) has been or will be used by such Initial Purchaser or any of its
representatives in connection with the offer and sale of the Series A Discount
Notes or the Convertible Notes pursuant hereto, including, but not limited to,
articles, notices or other communications published in any newspaper, magazine
or similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or general
advertising.
(d) Such Initial Purchaser agrees that, in connection with
Exempt Resales, such Initial Purchaser will solicit offers to buy the Series A
Discount Notes and Convertible Notes only from, and will offer to sell the
Series A Discount Notes and the Convertible Notes only to, Eligible Purchasers.
Each Initial Purchaser further agrees that it will offer to sell the Series A
Discount Notes and the Convertible Notes only to, and will solicit offers to buy
the Series A Discount Notes and the Convertible Notes only from (A) Eligible
Purchasers that the Initial Purchaser reasonably believes are QIBs, and (B)
Regulation S Purchasers, in each case, that agree that (x) the Series A Discount
Notes and the Convertible Notes purchased by them may be resold, pledged or
otherwise transferred within the time period referred to under Rule 144(k)
(taking into account the provisions of Rule 144(d) under the Act, if applicable)
under the Act, as in effect on the date of the transfer of such Series A
Discount Notes and the Convertible Notes, only (I) to the Company or any of its
subsidiaries, (II) to a person whom the seller reasonably believes is a QIB
purchasing for its own account or for the account of a QIB in a transaction
meeting the requirements of Rule 144A under the Act, (III) in an offshore
transaction (as defined in Rule 902 under the Act) meeting the requirements of
Rule 904 of the Act, (IV) in a transaction meeting the requirements of Rule 144
under the Act, (V) to an Accredited Institution that, prior to such transfer,
furnishes the Trustee a signed letter containing certain representations and
agreements relating to the registration of transfer of such Series A
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<PAGE> 21
Note or Convertible Notes (the form of which can be obtained from the Discount
Trustee or the Convertible Trustee, as applicable) and, if such transfer is in
respect of an aggregate principal amount of Series A Discount Notes or
Convertible Notes less than $100,000, an opinion of counsel acceptable to the
Company that such transfer is in compliance with the Act, (VI) in accordance
with another exemption from the registration requirements of the Act (and based
upon an opinion of counsel acceptable to the Company) or (VII) pursuant to an
effective registration statement and, in each case, in accordance with the
applicable securities laws of any state of the United States or any other
applicable jurisdiction and (y) they will deliver to each person to whom such
Series A Discount Notes or the Convertible Notes or an interest therein is
transferred a notice substantially to the effect of the foregoing.
(e) Such Initial Purchaser and its affiliates or any person
acting on its or their behalf have not engaged or will not engage in any
directed selling efforts within the meaning of Regulation S with respect to the
Series A Discount Notes or the Convertible Notes.
(f) The Series A Discount Notes and the Convertible Notes
offered and sold by such Initial Purchaser pursuant hereto in reliance on
Regulation S have been and will be offered and sold only in offshore
transactions.
(g) Each Initial Purchaser agrees that it has not offered or
sold and will not offer or sell the Discount Notes or the Convertible Notes in
the United States or to, or for the benefit or account of, a U.S. Person (other
than a distributor), in each case, as defined in Rule 902 under the Act (i) as
part of its distribution at any time and (ii) otherwise until 40 days after the
later of the commencement of the offering of the Discount Notes and the
Convertible Notes pursuant hereto and the Closing Date or the Option Closing
Date, as the case may be, other than in accordance with Regulation S of the Act
or another exemption from the registration requirements of the Act. Such Initial
Purchaser agrees that, during such 40-day restricted period, it will not cause
any advertisement with respect to the Discount Notes or the Convertible Notes
(including any "tombstone" advertisement) to be published in any newspaper or
periodical or posted in any public place and will not issue any circular
relating to either the Discount Notes or the Convertible Notes, except such
advertisements as are permitted by and include the statements required by
Regulation S.
(h) Each Initial Purchaser agrees that, at or prior to
confirmation of a sale of Discount Notes or the Convertible Notes by it to any
distributor, dealer or person receiving a selling concession, fee or other
remuneration during the 40-day restricted period referred to in Rule 903(c)(2)
under the Act, it will send to such distributor, dealer or person receiving a
selling concession, fee or other remuneration a confirmation or notice to
substantially the following effect:
"The Discount Notes and the Convertible Notes covered
hereby have not been registered under the U.S. Securities Act of
1933, as amended (the "Securities Act"), and may not be offered and
sold within the United States or to, or for the account or benefit
of, U.S. persons (i) as part of your distribution at any time or
(ii) otherwise until 40 days after the later of the
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<PAGE> 22
commencement of the Offering and Closing Date or the Option Closing
Date, as the case may be, except in either case in accordance with
Regulation S under the Securities Act (or Rule 144A or to Accredited
Institutions in transactions that are exempt from the registration
requirements of the Securities Act), and in connection with any
subsequent sale by you of the Discount Notes or the Convertible
Notes covered hereby in reliance on Regulation S during the period
referred to above to any distributor, dealer or person receiving a
selling concession, fee or other remuneration, you must deliver a
notice to substantially the foregoing effect. Terms used above have
the meanings assigned to them in Regulation S."
(i) The sale of the Series A Discount Notes and the
Convertible Notes offered and sold by such Initial Purchaser pursuant hereto in
reliance on Regulation S is not part of a plan or scheme to evade the
registration provisions of the Act.
(j) Such Initial Purchaser further represents and agrees that
(1) it has not offered or sold and will not offer or sell any Series A Notes or
Convertible Notes to persons in the United Kingdom prior to the expiration of
the period of six months from the Closing Date, except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their business or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995, (ii) it has complied and will comply with
all applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Series A Notes and Convertible Notes in,
from or otherwise involving the United Kingdom and (iii) it has only issued or
passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issuance of the Series A Notes or the
Convertible Notes to a person who is of a kind described in Article 11(3) of the
Financial Services Act of 1986 (Investment Advertisements) (Exemptions) Order
1996 (as amended) or is a person to whom the document may otherwise lawfully be
issued or passed on.
(k) Such Initial Purchaser agrees that it will not offer, sell
or deliver any of the Series A Notes or the Convertible Notes in any
jurisdiction outside the United States except under circumstances that will
result in compliance with the applicable laws thereof, and that it will take at
its own expense whatever action is required to permit its purchase and resale of
the Series A Notes or the Convertible Notes in such jurisdictions. Such Initial
Purchaser understands that no action has been taken to permit a public offering
in any jurisdiction outside the United States where action would be required for
such purpose.
Such Initial Purchaser acknowledges that the Company and, for
purposes of the opinions to be delivered to each Initial Purchaser pursuant to
Section 9 hereof, counsel to the Company and counsel to the Initial Purchasers
will rely upon the accuracy and truth of the foregoing representations and such
Initial Purchaser hereby consents to such reliance.
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8. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Initial Purchaser, its directors, officers, partners, employees and each person,
if any, who is an affiliate of such Initial Purchaser within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, and each of its
directors, officers, partners and employees from and against any and all losses,
claims, damages, liabilities and judgments (including, without limitation, any
legal or other expenses incurred in connection with investigating or defending
any matter, including any action, that could give rise to any such losses,
claims, damages, liabilities or judgments) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Offering Memoranda
(or any amendment or supplement thereto), the Preliminary Offering Memoranda or
any Rule 144A Information provided by the Company to any holder or prospective
purchaser of Series A Discount Notes or Convertible Securities pursuant to
Section 5(h) or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except untrue statements made in or omission from the
Preliminary Offering Memoranda (or any supplement or amendment thereto) that are
corrected in the Offering Memoranda (or any supplement or amendment thereto)
insofar as such losses, claims, damages, liabilities or judgments are caused by
any such untrue statement or omission or alleged untrue statement or omission
based upon information relating to the Initial Purchasers furnished in writing
to the Company by such Initial Purchaser; provided, that the foregoing indemnity
agreement with respect to any Preliminary Offering Memoranda shall not inure to
the benefit of any Initial Purchaser who failed to deliver an Offering Memoranda
(as then amended or supplemented, provided by the Company to the several Initial
Purchasers in the requisite quantity and on a timely basis to permit proper
delivery on or prior to the Closing Date) to the person asserting any losses,
claims, damages and liabilities and judgments caused by any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Offering Memoranda, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, if such material misstatement or omission or
alleged material misstatement or omission was cured in the Offering Memoranda.
(b) Each Initial Purchaser, severally and not jointly, agrees
to indemnify and hold harmless the Company, and its directors and officers and
each person, if any, who controls (within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act) the Company, to the same extent as the
foregoing indemnity from the Company to the Initial Purchasers but only with
reference to information relating to the Initial Purchasers furnished in writing
to the Company by the Initial Purchasers expressly for use in the Preliminary
Offering Memoranda or the Offering Memoranda.
(c) In case any action shall be commenced involving any person
in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b)
(the "indemnified party"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "indemnifying party") in
writing and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 8(a) and 8(b), the Initial Purchasers shall not
be required
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to assume the defense of such action pursuant to this Section 8(c), but may
employ separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
the Initial Purchasers). Any indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment of such counsel shall have been
specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party shall have failed to assume the defense of such action or
employ counsel reasonably satisfactory to the indemnified party or (iii) the
named parties to any such action (including any impleaded parties) include both
the indemnified party and the indemnifying party, and the indemnified party
shall have been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the indemnifying party (in which case the indemnifying party shall
not have the right to assume the defense of such action on behalf of the
indemnified party). In any such case, the indemnifying party shall not, in
connection with any one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for all indemnified parties
and all such fees and expenses shall be reimbursed as they are incurred. Such
firm shall be designated in writing by Donaldson, Lufkin & Jenrette Securities
Corporation, in the case of the parties indemnified pursuant to Section 8(a),
and by the Company, in the case of parties indemnified pursuant to Section 8(b).
The indemnifying party shall indemnify and hold harmless the indemnified party
from and against any and all losses, claims, damages, liabilities and judgments
by reason of any settlement of any action (i) effected with its written consent
or (ii) effected without its written consent if the settlement is entered into
more than 45 business days after the indemnifying party shall have received a
request from the indemnified party for reimbursement for the fees and expenses
of counsel (in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the indemnifying
party shall have failed to comply with such reimbursement request and such
indemnifying party shall have received notice of the terms of the settlement at
least 30 days prior to such settlement being entered into, provided, however, an
indemnifying party shall be entitled to withhold any disputed portion of a
reimbursement in respect of a settlement effected without its written consent,
pending resolution of a dispute regarding the request if such indemnifying party
(i) reimburses such indemnified party in accordance with such request to the
extent it considers in good faith such request to be reasonable and (ii)
provides written notice detailing with reasonable specificity to the indemnified
party why the unpaid balance is unreasonable. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement or compromise of, or consent to the entry of judgment with respect
to, any pending or threatened action in respect of which the indemnified party
is or could have been a party and indemnity or contribution may be or could have
been sought hereunder by the indemnified party, unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability on claims that are or could have been the subject
matter of such action and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party.
(d) To the extent the indemnification provided for in this
Section 8 is determined by a court of competent jurisdiction to be unavailable
to an indemnified party or insufficient in respect of any losses, claims,
damages, liabilities or judgments referred to therein or insufficient to hold it
harmless,
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<PAGE> 25
then each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and each Initial Purchaser on the other hand from the
offering of the Series A Discount Notes and the Convertible Securities or (ii)
if the allocation provided by clause 8(d)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 8(d)(i) above but also the relative
fault of the Company, on the one hand, and each Initial Purchaser, on the other
hand, in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Company, on the
one hand, and each Initial Purchaser, on the other hand, shall be deemed to be
in the same proportion as the total net proceeds from the offering of the Series
A Discount Notes and the Convertible Securities (after underwriting discounts
and commissions, but before deducting expenses) received by the Company, and the
total discounts and commissions received by each Initial Purchaser bears to the
total price to investors of the Series A Discount Notes and the Convertible
Securities, in each case as set forth in the table on the cover page of the
Offering Memoranda. The relative fault of the Company, on the one hand, and each
Initial Purchaser, on the other hand, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company, on the one hand, or such Initial Purchaser,
on the other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Initial Purchasers agree that it would not
be just and equitable if contribution pursuant to this Section 8(d) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses incurred
by such indemnified party in connection with investigating or defending any
matter, including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 8, no Initial Purchaser shall be required to contribute any amount in
excess of the amount by which the total discounts and commissions received by
such Initial Purchaser exceeds the amount of any damages which such Initial
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Initial Purchasers' obligations to contribute pursuant to
this Section 8(d) are several in proportion to the respective principal amount
of Notes purchased by each of the Initial Purchasers hereunder, and not joint.
(e) The remedies provided for in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
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<PAGE> 26
9. Conditions of Initial Purchasers' Obligations. The several
obligations of the Initial Purchasers to purchase the Series A Discount Notes
and the Firm Notes under this Agreement and the Additional Notes, if any, on any
Option Closing Date are subject to the satisfaction of each of the following
conditions:
(a) All the representations and warranties of the Company
contained in this Agreement shall be true and correct on Closing Date, and on
each Option Closing Date, if any, with the same force and effect as if made on
and as of the Closing Date, or on each Option Closing Date, if any.
(b) On or after the date hereof, (i) there shall not have
occurred any downgrading, suspension or withdrawal of, nor shall any notice have
been given to the Company of any potential or intended downgrading, suspension
or withdrawal of, or of any review (or of any potential or intended review) for
a possible change that does not indicate the direction of the possible change
in, any rating of the Company or any securities of the Company (including,
without limitation, the placing of any of the foregoing ratings on credit watch
with negative or developing implications or under review with an uncertain
direction) by any "nationally recognized statistical rating organization" as
such term is defined for purposes of Rule 436(g)(2) under the Act, (ii) there
shall not have occurred any change, nor shall any notice have been given of any
potential or intended change, in the outlook for any rating of the Company or
any securities of the Company by any such rating organization and (iii) no such
rating organization shall have given notice that it has assigned (or is
considering assigning) a lower rating to the Notes than that on which the Notes
were marketed.
(c) Since the respective dates as of which information is
given in the Offering Memoranda, other than as set forth in the Offering
Memoranda (exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), (i) there shall not have occurred any change or any
development involving a prospective change in the condition, financial or
otherwise, or the earnings, business, management or operations of the Company
and its subsidiaries and the Affiliates, taken as a whole, (ii) there shall not
have been any change or any development involving a prospective change in the
capital stock or in the long-term debt of the Company or any of its subsidiaries
or the Affiliates and (iii) neither the Company nor any of its subsidiaries nor,
to the knowledge of the Company, the Affiliates shall have incurred any
liability or obligation, direct or contingent, the effect of which, in any such
case described in clause 9(c)(i), 9(c)(ii) or 9(c)(iii), in your judgment, is
material and adverse and, in your reasonable judgment, makes it impracticable to
market the Series A Discount Notes or the Convertible Notes on the terms and in
the manner contemplated in the Offering Memoranda.
(d) You shall have received on the Closing Date a certificate
dated the Closing Date, and on an Option Closing Date, if any, dated such Option
Closing Date, signed by the President and the Chief Financial Officer of the
Company, confirming the matters set forth in Sections 6(ff), 9(a) and 9(b) and
stating that the Company has complied with all the agreements and satisfied all
of the conditions herein contained and required to be complied with or satisfied
on or prior to the Closing Date or Option Closing Date, as the case may be.
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<PAGE> 27
(e) You shall have received on the Closing Date and each
Option Closing Date, if any, an opinion (satisfactory to you and counsel for the
Initial Purchasers), dated the Closing Date or such Option Closing Date, as the
case may be, of Richard J. Lubasch, Senior Vice President and General Counsel of
the Company and its subsidiaries, to the effect that:
(i) each of the Company and its subsidiaries is duly
qualified and is in good standing as a foreign corporation
authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property
requires such qualification, except where the failure to be so
qualified would not have a Material Adverse Effect;
(ii) all the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are
fully paid, non-assessable and not subject to any preemptive
or similar rights;
(iii) all of the outstanding shares of capital stock of
each of the Company's subsidiaries have been duly authorized
and validly issued and are fully paid and non-assessable, and
all or a majority of the outstanding shares of capital stock
of, or other ownership interest in, each of the Company's
subsidiaries are owned by the Company, free and clear of any
Lien;
(iv) the Company has the authorized and outstanding
capital stock as set forth in the Offering Memoranda;
(v) the execution, delivery and performance of this
Agreement and the other Operative Documents by the Company,
the compliance by the Company with all provisions hereof and
thereof and the consummation of the transactions contemplated
hereby and thereby will not (i) violate any provision of the
charter or by-laws of the Company or any of its subsidiaries,
(ii) constitute a breach of or default under any of the terms
of any indenture, 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 are bound, (iii)
violate or conflict with any rule, statute or regulation of
the United States, the State of New York or the State of
Delaware or any judgment, order or decree applicable to the
Company or any of its Subsidiaries of any court or any
governmental body or agency of the United States or the States
of Delaware or New York having jurisdiction over the Company
or any of its subsidiaries;
(vi) to the best of his knowledge after due inquiry,
neither the Company nor any of its subsidiaries has violated
the provisions of the Foreign Corrupt Practices Act or the
rules and regulations promulgated thereunder, except for such
violations which, singly or in the aggregate, would not have a
Material Adverse Effect, except that no opinion need be given
with respect to the books and records
26
<PAGE> 28
of the Company and its subsidiaries or their accounting
controls and other matters referred to in Section 13(b) of the
Securities Exchange Act of 1934;
(vii) no consent, approval, authorization or order of
any Delaware, New York or United States federal court or
governmental agency or body is required for the consummation
of the transactions contemplated herein, except such as may be
required under the Blue Sky or securities laws of any
jurisdiction in connection with the purchase and sale of the
Securities by the Underwriter (as to which counsel need
express no opinion) and such other approvals (specified in
such opinion) as have been obtained ;
(viii) there are no contracts, agreements or
understandings, other than as further described in the
Offering Memoranda between the Company and any person granting
such person the right to require the Company to file a
registration statement under the Act with respect to any
securities of the Company or to require the Company to include
such securities with the Notes registered pursuant to any
Registration Statement;
(ix) neither the Company nor any of the subsidiaries is
now, nor immediately after the sale of the Securities to be
sold by it will be, (a) an "investment company" or a company
"controlled" by an investment company within the meaning of
the Investment Company Act of 1940, as amended, or (b) a
"holding company" or a "subsidiary company" of a holding
company, or an "affiliate", thereof within the meaning of the
Public Utility Holding Company Act of 1935, as amended;
In addition, Richard J. Lubasch shall state that he has participated
in discussions with officers and other representatives of the Company,
representatives of the independent public accountants for the Company and you in
which the contents of the Offering Memoranda and related matters were discussed
and, although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Offering Memoranda or any documents incorporated by reference
in the Offering Memoranda and has not made any independent verification thereof
(except to the extent specified in paragraph (iv) above), no fact has come to
the attention of such counsel that leads him to believe that the Offering
Memoranda, as of the date of such opinion, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (it being understood that such counsel is
not commenting as to the financial statements, schedules and other financial
data included in, or omitted from, or referred to in the Offering Memoranda).
The opinion of such counsel described in Section 9(e) above shall be
rendered to you at the request of the Company and shall so state therein.
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<PAGE> 29
(f) You shall have received on the Closing Date and each
Option Closing Date, if any, an opinion (satisfactory to you and counsel for the
Initial Purchasers), dated the Closing Date or such Option Closing Date, as the
case may be, of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the
Company, to the effect that:
(i) the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of
its jurisdiction of incorporation and has the corporate power
and authority to carry on its business and to own, lease and
operate its properties in each case as described in the
Offering Memoranda;
(ii) the Series A Discount Notes and the Convertible
Notes have been duly authorized by the Company and, when
executed and authenticated in accordance with the provisions
of the Indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement,
will be entitled to the benefits of the Indenture and will be
valid and binding obligations of the Company, enforceable in
accordance with their terms except to the extent (a)
enforcement thereof may be limited by (1) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance
or similar laws now or hereafter in effect relating to
creditors' rights generally, (2) general principles of equity
(regardless of whether enforcement is considered in a
proceeding in equity or at law), (3) requirements that a claim
with respect to any Discount Notes (or a judgment denominated
other than in U.S. dollars in respect of such a claim) be
converted into U.S. dollars at a rate of exchange prevailing
on a date determined pursuant to applicable law and (4)
governmental authority to limit, delay or prohibit the making
of, payments of in a foreign currency, currency units or
composite currencies, outside the United States and (b) the
waivers contained in Section 4.9 of the Convertible Indenture
and Section 4.06 of the Discount Indenture may be deemed
unenforceable;
(iii) the Indentures have been duly authorized, executed
and delivered by the Company and are valid and binding
obligations of the Company, enforceable against the Company in
accordance with their respective terms except to the extent
(a) enforcement thereof may be limited by (1) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance
or other similar laws now or hereafter in effect relating to
creditors' rights generally, (2) general principles of equity
(regardless of whether enforcement is considered in a
proceeding in equity or at law), (3) requirements that a claim
with respect to any Discount Notes (or a judgment denominated
other than in U.S. dollars in respect of such a claim) be
converted into U.S. dollars at a rate of exchange prevailing
on a date determined pursuant to applicable law and (4)
governmental authority to limit, delay or prohibit the making
of, payments of in a foreign currency, currency units or
composite currencies, outside the United States and (b) the
waivers contained in
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<PAGE> 30
Section 4.06 of the Convertible Indenture and Section 4.9 of
the Discount Indenture may be deemed unenforceable;
(iv) this Agreement has been duly authorized, executed
and delivered by the Company;
(v) each of the Senior Discount Note Registration Rights
Agreement and Convertible Subordinated Note Registration
Rights Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding obligation
of the Company, enforceable against the Company in accordance
with its terms, except to the extent (1) enforcement thereof
may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to creditors' rights generally,
(2) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in
equity), (3) requirements that a claim with respect to any
Discount Notes (or a judgment denominated other than in U.S.
dollars in respect of such a claim) be converted into U.S.
dollars at a rate of exchange prevailing on a date determined
pursuant to applicable law and (4) governmental authority to
limit, delay or prohibit the making of, payments of in a
foreign currency, currency units or composite currencies,
outside the United States and (5) rights to indemnification
and contribution may be limited by United States federal or
state laws or the policies under such laws;
(vi) the Series B Senior Notes have been duly authorized
by the Company;
(vii) the Indentures and the Securities conform in all
material respects to the descriptions thereof contained in the
Offering Memoranda and the statements under the caption
"Taxation" in the Offering Memoranda, insofar as they purport
to constitute statements of law or legal conclusions, have
been reviewed by us and fairly present information disclosed
therein in all material respects;
(viii) assuming the accuracy of the representations made
by the Company, based on such counsel's analysis of
representations made to them by the Company regarding the
Company's historical development, the activities of the
Company's employees, the Company's assets and investment
activities, the Company's sources of revenues and the
Company's public statements regarding the Company's business
and all such other matters which such counsel has deemed
relevant for purposes of rendering such opinion, such counsel
is of the opinion that the Company is not subject to
registration as an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended;
29
<PAGE> 31
(ix) the shares of Common Stock initially issuable upon
conversion of the Convertible Notes have been duly authorized
and reserved for issuance upon such conversion and, when
issued upon such conversion, in accordance with the terms of
the Convertible Indenture, will be validly issued, fully paid
and nonassessable; the Common Stock of the Company conforms in
all material respects to the description thereof contained in
the applicable Offering Memorandum regarding the Convertible
Notes;
(x) the stockholders of the Company or other holders of
the Company's securities have no pre-emptive or similar rights
arising under the Company's Certificate of Incorporation,
By-laws or the Delaware General Corporation Law with respect
to the Convertible Notes or the Common Stock issuable upon
conversion of the Convertible Notes;
(xi) the execution and delivery by the Company of the
Indentures, this Agreement and each of the Registration Rights
Agreements and the consummation by the Company of the
transactions contemplated under each of the Indentures, this
Agreement and each of the Registration Rights Agreements, each
in accordance with its terms do not (a) (i) conflict any
provision of the Certificate of Incorporation or by-laws of
the Company or (ii) constitute a breach of or default under
any of the terms of any indenture or other agreement governed
by the laws of the State of New York or the Delaware General
Corporation Law (the "DGCL") to which the Company is a party
or bound which is listed as an exhibit to the Company's most
recent Form 10-K (except that such counsel need not express an
opinion as to any covenant, restriction or provision of any
such agreement with respect to financial covenants, ratios or
tests or any aspect of the financial condition or results of
operations of the Company) or (iii) result in the violation of
the DGCL or of any statute, rule or regulation (collectively,
the "Requirements of Law") of the United States, the State of
New York or the State of Delaware or any judgment, order or
decree know to such counsel to be applicable to the Company or
of any court, regulatory body, administrative agency,
governmental body or arbitrator (collectively, the "Orders")
of the United States or the States of Delaware or New York
having jurisdiction over the Company; provided, however, that
such counsel's opinion expressed in this paragraph may be
based on such counsel's review of those Requirements of Law
which, in such counsel's experience, are normally applicable
to transactions of the type provided for in this Agreement,
but without having made any special investigation concerning
any other Requirements of Law, and those Orders specifically
identified to such counsel by the Company as being Orders to
which it is subject; provided, however, that such counsel need
express no opinion with respect to (x) the adequacy of
disclosure for federal securities law purposes or the
fairness, completeness, correctness or accuracy of the
statements contained in the Offering Memoranda or
30
<PAGE> 32
the documents incorporated by reference therein, which matters
shall be addressed in paragraph following paragraph (xiii)
below, or (y) any state securities or Blue Sky laws;
(xii) assuming that (i) each Initial Purchaser is a QIB,
or a Regulation S Purchaser, (ii) the accuracy of the
representations and warranties of the Company set forth in
Section 6 of this Agreement and of the Initial Purchasers set
forth in Section 7 of this Agreement, (iii) the due
performance by the Company of the covenants and agreements set
forth in Section 5 of this Agreement, and (iv) the compliance
by the Initial Purchasers with the offering and transfer
procedures and restrictions described in the Offering
Memoranda, the offer sale and delivery of the Notes to the
Initial Purchasers in the manner contemplated by this
Agreement and the Offering Memoranda do not require
registration under the Securities Act of 1933 and the
Indentures do not require qualification under the TIA, it
being understood that we express no opinion as to any
subsequent resale of any of the Notes.
In addition, Skadden, Arps, Slate, Meagher & Flom LLP shall state
that it has participated in discussions with others and other representatives of
the Company, representatives of the independent public accountants for the
Company and you in which the contents of the Offering Memoranda and related
matters were discussed and, although such counsel is not passing upon and does
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Offering Memoranda or any documents incorporated by
reference in the Offering Memoranda and has not made any independent
verification thereof (except to the extent specified in paragraph (vii) above),
no fact has come to the attention of such counsel that leads it to believe that
the Offering Memoranda or any documents incorporated by reference in the
Offering Memoranda, as of the date of such opinion, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that such
counsel need express no opinion or belief with respect to, and need not comment
on, the financial statements, schedules or other financial data included in,
omitted from or referred to in the Offering Memoranda.
(g) You shall have received on the Closing Date and each
Option Closing Date, if any, an opinion (satisfactory to you and counsel for the
Initial Purchasers), dated the Closing Date or such Option Closing Date, as the
case may be, of Pavia Ansaldo e Verusio, Italian counsel for the Company.
(h) The Initial Purchasers shall have received on the Closing
Date an opinion, dated the Closing Date, of Latham & Watkins, counsel for the
Initial Purchasers, in form and substance reasonably satisfactory to the Initial
Purchasers.
(i) The Initial Purchasers shall have received, at the time
this Agreement is executed and at the Closing Date, letters dated the date
hereof or the Closing Date, as the case may be, in
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<PAGE> 33
form and substance satisfactory to the Initial Purchasers from each of Ernst &
Young LLP and Coopers & Lybrand, S.a.S., independent public accountants,
containing the information and statements of the type ordinarily included in
accountants' "comfort letters" to the Initial Purchasers with respect to the
financial statements and certain financial information contained in the Offering
Memorandum.
(j) The Convertible Notes shall have been approved by the NASD
for trading and duly listed in PORTAL.
(k) The Initial Purchasers shall have received a counterpart,
conformed as executed, of each of the Indenture which shall have been entered
into by the Company, and the Discount Trustee or the Convertible Trustee, as
applicable.
(l) The Company shall have executed the Registration Rights
Agreement and the Initial Purchasers shall have received an original copy
thereof, duly executed by the Company.
(m) The tender offer for the Company's 13 1/4% Senior Discount
Notes due 2000 shall have been consummated and evidence as to such, satisfactory
to the Initial Purchasers and their counsel, shall have been delivered to the
Initial Purchasers.
(n) The Company shall not have failed at or prior to the
Closing Date to perform or comply with any of the agreements herein contained
and required to be performed or complied with by the Company, at or prior to the
Closing Date.
10. Agreement Among Initial Purchasers. Each of the Initial
Purchasers agrees, by execution of this Agreement, that the IPMA Agreement Among
Managers Version I (New York Law Version) (the "IPMA Agreement") shall be
applicable to the relationship among such Initial Purchasers in connection with
the issuance of the Discount Notes and, except as expressly specified in this
Agreement, the IPMA Recommendations shall not apply. In the event that the terms
of the IPMA Agreement are inconsistent with the terms of this Agreement, the
provisions of this Agreement shall apply. Donaldson, Lufkin & Jenrette
International and Donaldson, Lufkin & Jenrette Securities Corporation are,
together, the "Lead Manager" for purposes of the IPMA Agreement; provided,
however, that for the purposes of Section 5 (Stabilisation) of the IPMA
Agreement, Donaldson, Lufkin & Jenrette International is the "Lead Manager."
11. Effectiveness of Agreement and Termination. This Agreement shall
become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time on or prior to the
Closing Date by the Initial Purchasers by written notice to the Company if any
of the following has occurred: (i) any outbreak or escalation of hostilities or
other national or international calamity or crisis or change in economic
conditions or in the financial markets of the United States or elsewhere that,
in the Initial Purchasers' judgment, is material and adverse and, in the Initial
Purchasers' judgment, makes it impracticable to market the Series A Discount
Notes on the terms and in the manner contemplated in the Offering Memorandum,
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<PAGE> 34
(ii) the suspension or material limitation of trading in securities or other
instruments on the New York Stock Exchange, the American Stock Exchange, the
Chicago Board of Options Exchange, the Chicago Mercantile Exchange, the Chicago
Board of Trade or the Nasdaq National Market or limitation on prices for
securities or other instruments on any such exchange or the Nasdaq National
Market, (iii) the suspension of trading of any securities of the Company on any
exchange or in the over-the-counter market, (iv) the enactment, publication,
decree or other promulgation of any federal or state statute, regulation, rule
or order of any court or other governmental authority which in your judgment
materially and adversely affects, or will materially and adversely affect, the
business, prospects, financial condition or results of operations of the Company
and its subsidiaries, taken as a whole, (v) the declaration of a banking
moratorium by either federal or New York State authorities or (vi) the taking of
any action by any federal, state or local government or agency in respect of its
monetary or fiscal affairs which in your judgment has a Material Adverse Effect
on the financial markets in the United States.
12. Miscellaneous. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (i) if to the Company, to Cellular
Communications International, Inc., 110 East 59th St., New York, New York 10022,
ATTN: Chief Financial Officer and (ii) if to the Initial Purchasers, Donaldson,
Lufkin & Jenrette Securities Corporation, 277 Park Avenue, New York, New York
10172, Attention: Syndicate Department or Wasserstein Perella Securities, Inc,
31 West 52nd Street, New York, NY 10019, Attention: General Counsel, as
applicable, or in any case to such other address as the person to be notified
may have requested in writing.
The respective indemnities, contribution agreements,
representations, warranties and other statements of the Company, and the Initial
Purchasers set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive delivery of and payment
for the Notes, regardless of (i) any investigation, or statement as to the
results thereof, made by or on behalf of the Initial Purchasers, the officers,
directors, partners and employees of the Initial Purchasers or any affiliate of
the Initial Purchasers, the Company, the officers or directors of the Company,
(ii) acceptance of the Notes and payment for them hereunder and (iii)
termination of this Agreement.
If for any reason either of the Notes are not delivered by or on
behalf of the Company as provided herein (other than as a result of any
termination of this Agreement pursuant to Section 10), the Company, jointly and
severally, agrees to reimburse the Initial Purchasers for all out-of-pocket
expenses (including the fees and disbursements of counsel) incurred by them.
Notwithstanding any termination of this Agreement, the Company shall be liable
for all expenses which it has agreed to pay pursuant to Section 5(i) hereof. The
Company also agrees to reimburse each of the Initial Purchasers and its
officers, directors, partners, employees, representatives, agents and each
person, if any, who is an affiliate of such Initial Purchaser within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act for any and all fees
and expenses (including without limitation the fees and expenses of counsel)
incurred by them in connection with enforcing their rights under this Agreement
(including without limitation its rights under Section 8).
33
<PAGE> 35
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, each of the
Initial Purchasers, such Initial Purchaser's directors and officers, any
affiliates referred to herein, the directors of the Company and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Notes from the Initial Purchasers merely because of such purchase.
This Agreement shall be governed and construed in accordance with
the laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the Initial Purchasers.
[SIGNATURE PAGES FOLLOW]
34
<PAGE> 36
Very truly yours,
CELLULAR COMMUNICATIONS INTERNATIONAL, INC.
By:/s/ Richard J. Lubasch
-------------------------
Name: RICHARD J. LUBASCH
Title: SENIOR VICE PRESIDENT & GENERAL COUNSEL
<PAGE> 37
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
By: /s/ Curtis Dickinson
------------------------
Name: CURTIS DICKINSON
Title: VICE PRESIDENT
DONALDSON, LUFKIN & JENRETTE INTERNATIONAL
By: /s/ Po Masmejean
------------------------
Name: Po Masmejean
Title: Managing Director
WASSERSTEIN PERELLA SECURITIES, INC.
By:
------------------------
Name:
Title:
<PAGE> 38
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
By:
------------------------
Name:
Title:
DONALDSON, LUFKIN & JENRETTE INTERNATIONAL
By:
------------------------
Name:
Title:
WASSERSTEIN PERELLA SECURITIES, INC.
By: /s/ James C. Kingsbery
------------------------
Name: JAMES C. KINGSBERY
Title: VICE PRESIDENT
<PAGE> 39
SCHEDULE A
Principal Amount at maturity of Discount Notes
---------------------------
Initial Purchasers:
---------------------------
Donaldson, Lufkin & Jenrette
International(1)............ EURO 199,750,000
Wasserstein Perella Securities, Inc EURO 35,250,000
-----------
Total.................. EURO 235,000,000
===========
Principal Amount of Firm Notes
Initial Purchasers:
Donaldson, Lufkin & Jenrette
Securities Corporation $ 63,750,000
Wasserstein Perella Securities, Inc. $ 11,250,000
----------
Total $ 75,000,000
==========
(1) Sales made within the United States and Canada may be made through
affiliates of Donaldson, Lufkin & Jenrette International.
<PAGE> 40
SCHEDULE B
Subsidiaries
CCIL Haiti, Inc.
CCIL Mauritius, Inc.
<PAGE> 41
EXHIBIT A-1
Form of Senior Discount Note Registration Rights Agreement
<PAGE> 42
EXHIBIT A-2
Form of Convertible Subordinated Note Registration Rights Agreement
<PAGE> 1
- --------------------------------------------------------------------------------
9 1/2% SENIOR DISCOUNT NOTES DUE 2005
REGISTRATION RIGHTS AGREEMENT
Dated March 18, 1998
by and among
CELLULAR COMMUNICATIONS INTERNATIONAL, INC.
as the Issuer
and
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DONALDSON, LUFKIN & JENRETTE INTERNATIONAL
and
WASSERSTEIN PERELLA SECURITIES, INC.
as the Initial Purchasers
- --------------------------------------------------------------------------------
<PAGE> 2
This Registration Rights Agreement (this "Agreement") is made and entered
into as of March 18, 1998, among Cellular Communications International, Inc., a
Delaware corporation (the "Company"), and Donaldson, Lufkin & Jenrette
Securities Corporation, Donaldson, Lufkin & Jenrette International and
Wasserstein Perella Securities, Inc. (together, the "Initial Purchasers"), each
of whom has agreed to purchase, severally and not jointly, the Company's 9 1/2%
Series A Senior Discount Notes due 2005 (the "Series A Notes") pursuant to the
Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated March 11,
1998, (the "Purchase Agreement"), by and among the Company and the Initial
Purchasers. In order to induce the Initial Purchasers to purchase the Series A
Notes, the Company has agreed to provide the registration rights set forth in
this Agreement. The execution and delivery of this Agreement is a condition to
the obligations of the Initial Purchasers set forth in Section 9 of the Purchase
Agreement. Capitalized terms used herein and not otherwise defined shall have
the meaning assigned to them the Indenture, dated March 18, 1998, between the
Company and The Chase Manhattan Bank, as Trustee, relating to the Series A Notes
and the Series B Notes (the "Indenture").
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Accreted Value: As defined in the Indenture.
Act: The Securities Act of 1933, as amended.
Affiliate: As defined in Rule 144 of the Act.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Certificated Securities: Definitive Notes, as defined in the Indenture.
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated" for purposes
of this Agreement upon the occurrence of (a) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the Series B
Notes to be issued in the Exchange Offer, (b) the maintenance of such Exchange
Offer Registration Statement continuously effective and the keeping of the
Exchange Offer open for a period not less than the period required pursuant to
Section 3(b) hereof and (c) the delivery by the Company to the Registrar under
the Indenture of Series B Notes in the same aggregate principal amount as the
1
<PAGE> 3
aggregate principal amount of Series A Notes tendered by Holders thereof
pursuant to the Exchange Offer.
Consummation Deadline: As defined in Section 3(b) hereof.
Convertible Subordinated Notes: The Company's 6% Convertible Subordinated
Notes due 2005 to be issued pursuant to the Purchase Agreement concurrently with
the Series A Notes.
Effectiveness Deadline: As defined in Section 3(a) and 4(a) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The exchange and issuance by the Company of a principal
amount at maturity of Series B Notes (which shall be registered pursuant to the
Exchange Offer Registration Statement) equal to the outstanding principal amount
at maturity of Series A Notes that are tendered by such Holders in connection
with such exchange and issuance.
Exchange Offer Registration Statement: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchasers propose
to sell the Series A Notes to certain "qualified institutional buyers," as such
term is defined in Rule 144A under the Act and pursuant to Regulation S under
the Act.
Filing Deadline: As defined in Sections 3(a) and 4(a) hereof.
Holders: As defined in Section 2 hereof.
Participating Broker-Dealer: Any Broker-Dealer that holds Series B Notes
that were acquired in the Exchange Offer in exchange for Series A Notes that
such Broker-Dealer acquired for its own account as a result of market making
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any of its affiliates).
Prospectus: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
Recommencement Date: As defined in Section 6(d) hereof.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Company relating
to (a) an offering of Series B Notes pursuant to an Exchange Offer or (b) the
registration for resale of Transfer Restricted Securities pursuant to the Shelf
Registration Statement, in each case, (i) that is filed pursuant to the
provisions of this Agreement and (ii) including the Prospectus
2
<PAGE> 4
included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
Regulation S: Regulation S promulgated under the Act.
Rule 144: Rule 144 promulgated under the Act.
Series B Notes: The Company's 9.5% Series B Senior Discount Notes due 2005
to be issued pursuant to the Indenture: (i) in the Exchange Offer or (ii) as
contemplated by Section 4 hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
Suspension Notice: As defined in Section 6(d) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as
in effect on the date of the Indenture.
Transfer Restricted Securities: Each Series A Note, until the earliest to
occur of (a) the date on which such Series A Note is exchanged in the Exchange
Offer for a Series B Note which is entitled to be resold to the public by the
Holder thereof without complying with the prospectus delivery requirements of
the Act, (b) the date on which such Series A Note has been disposed of in
accordance with a Shelf Registration Statement (and the purchasers thereof have
been issued Series B Notes), or (c) the date on which such Series A Note is
distributed to the public pursuant to Rule 144 under the Act (and purchasers
thereof have been issued Series B Notes) and each Series B Note until the date
on which such Series B Note is disposed of by a Broker-Dealer pursuant to the
"Plan of Distribution" contemplated by the Exchange Offer Registration Statement
(including the delivery of the Prospectus contained therein).
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "Holder") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable federal
law (after the procedures set forth in Section 6(a)(i) below have been complied
with), the Company shall (i) cause the Exchange Offer Registration Statement to
be filed with the Commission as soon as practicable after the Closing Date, but
in no event later than 90 days after the Closing Date (such 90th day being the
"Filing Deadline"), (ii) use all reasonable efforts to cause such Exchange Offer
Registration Statement to become effective at the earliest possible time, but in
no event later than 150 days after the Closing Date (such 150th day being the
"Effectiveness Deadline"), (iii) in connection with the foregoing, (A) file all
pre-effective amendments to such Exchange Offer Registration Statement as may be
necessary in order to cause it to become effective, (B) file, if applicable, a
post-effective amendment to such Exchange Offer Registration Statement pursuant
to Rule 430A under the Act and (C) cause all necessary filings, if any, in
connection
3
<PAGE> 5
with the registration and qualification of the Series B Notes to be made under
the Blue Sky laws of such jurisdictions as are necessary to permit Consummation
of the Exchange Offer, and (iv) upon the effectiveness of such Exchange Offer
Registration Statement, commence and Consummate the Exchange Offer. The Exchange
Offer shall be on the appropriate form permitting (i) registration of the Series
B Notes to be offered in exchange for the Series A Notes that are Transfer
Restricted Securities and (ii) resales of Series B Notes by Broker-Dealers that
tendered into the Exchange Offer Series A Notes that such Broker-Dealer acquired
for its own account as a result of market making activities or other trading
activities (other than Series A Notes acquired directly from the Company or any
of its Affiliates) as contemplated by Section 3(c) below.
(b) The Company shall use all reasonable efforts to cause the Exchange
Offer Registration Statement to be effective continuously, and shall keep the
Exchange Offer open for a period of not less than the minimum period required
under applicable federal and state securities laws to Consummate the Exchange
Offer; provided, however, that in no event shall such period be less than 20
Business Days. The Company shall cause the Exchange Offer to comply with all
applicable federal and state securities laws. No securities other than the
Series B Notes shall be included in the Exchange Offer Registration Statement.
The Company shall use its best efforts to cause the Exchange Offer to be
Consummated on the earliest practicable date after the Exchange Offer
Registration Statement has become effective, but in no event later than 30
business days thereafter (such 30th day being the "Consummation Deadline").
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Broker-Dealer who holds Transfer Restricted Securities that
were acquired for the account of such Broker-Dealer as a result of market-making
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any Affiliate of the Company), may exchange such
Transfer Restricted Securities pursuant to the Exchange Offer. Such "Plan of
Distribution" section shall also contain all other information with respect to
such sales by such Broker-Dealers that the Commission may require in order to
permit such sales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Transfer Restricted
Securities held by any such Broker-Dealer, except to the extent required by the
Commission as a result of a change in policy, rules or regulations after the
date of this Agreement.
Because such Broker-Dealer may be deemed to be an "underwriter" within the
meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any Series B
Notes received by such Broker-Dealer in the Exchange Offer, the Company shall
permit the use of the Prospectus contained in the Exchange Offer Registration
Statement by such Broker-Dealer to satisfy such prospectus delivery requirement.
To the extent necessary to ensure that the prospectus contained in the Exchange
Offer Registration Statement is available for sales of Series B Notes by
Broker-Dealers, the Company agrees to use all reasonable efforts to keep the
Exchange Offer Registration Statement continuously effective, supplemented,
amended and current as required by and subject to the provisions of Section 6(a)
and (c) hereof and in conformity with the requirements of this Agreement, the
Act and the policies, rules and regulations of the Commission as announced from
4
<PAGE> 6
time to time, for a period of one year from the Consummation Deadline or such
shorter period as will terminate when all Transfer Restricted Securities covered
by such Registration Statement have been sold pursuant thereto. The Company
shall provide sufficient copies of the latest version of such Prospectus to such
Broker-Dealers, promptly upon request, and in no event later than one day after
such request, at any time during such period.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Exchange Offer is not permitted by
applicable law (after the Company has complied with the procedures set forth in
Section 6(a)(i) below) or (ii) if any Holder of Transfer Restricted Securities
shall notify the Company within 20 Business Days following the Consummation
Deadline that (A) such Holder was prohibited by law or Commission policy from
participating in the Exchange Offer or (B) such Holder may not resell the Series
B Notes acquired by it in the Exchange Offer to the public without delivering a
prospectus and the Prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales by such Holder or (C)
such Holder is a Broker-Dealer and holds Series A Notes acquired directly from
the Company or any of its Affiliates, then the Company shall:
(x) cause to be filed, on or prior to 90 days after the earlier of (i) the
date on which the Company determines that the Exchange Offer Registration
Statement cannot be filed as a result of clause (a)(i) above and (ii) the date
on which the Company receives the notice specified in clause (a)(ii) above,
(such earlier date, the "Filing Deadline"), a shelf registration statement
pursuant to Rule 415 under the Act (which may be an amendment to the Exchange
Offer Registration Statement (the "Shelf Registration Statement")), relating to
all Transfer Restricted Securities, and
(y) shall use all reasonable efforts to cause such Shelf Registration
Statement to become effective on or prior to 150 days after the Filing Deadline
for the Shelf Registration Statement (such 150th day the "Effectiveness
Deadline").
If, after the Company has filed an Exchange Offer Registration Statement
that satisfies the requirements of Section 3(a) above, the Company is required
to file and make effective a Shelf Registration Statement solely because the
Exchange Offer is not permitted under applicable federal law (i.e., clause
(a)(i) above), then the filing of the Exchange Offer Registration Statement
shall be deemed to satisfy the requirements of clause (x) above; provided that,
in such event, the Company shall remain obligated to meet the Effectiveness
Deadline set forth in clause (y).
To the extent necessary to ensure that the Shelf Registration Statement is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a) and the other securities required
to be registered therein pursuant to Section 6(b)(ii) hereof, the Company shall
use its best efforts to keep any Shelf Registration Statement required by this
Section 4(a) continuously effective, supplemented, amended and current as
required by and subject to the provisions of Sections 6(b) and (c) hereof and in
conformity with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of at least two years (as extended pursuant to Section
5
<PAGE> 7
6(c)(i)) following the Closing Date), or such earlier date when Holders are able
to sell such Transfer Restricted Securities without restriction pursuant to Rule
144(k) under the Securities Act or any successor rule thereto or otherwise, or
such shorter period as will terminate when all Transfer Restricted Securities
covered by such Shelf Registration Statement have been sold pursuant thereto.
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to liquidated damages pursuant to
Section 5 hereof unless and until such Holder shall have provided all such
information. Each selling Holder agrees to promptly furnish additional
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not filed
with the Commission on or prior to the applicable Filing Deadline, (ii) any such
Registration Statement has not been declared effective by the Commission on or
prior to the applicable Effectiveness Deadline, (iii) the Exchange Offer has not
been Consummated on or prior to the Consummation Deadline or (iv) any
Registration Statement required by this Agreement is filed and declared
effective but shall thereafter cease to be effective or fail to be usable for a
period of time which shall exceed 90 days in the aggregate during any 365 day
period, for its intended purpose without being succeeded immediately by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself declared effective immediately (each such event referred to
in clauses (i) through (iv), a "Registration Default"), then the Company hereby
agrees to pay to each Holder of Transfer Restricted Securities affected thereby
liquidated damages as follows: the per annum interest rate on the Notes will
increase by 50 basis points, and the per annum interest rate will increase by an
additional 25 basis points for each subsequent 90-day period during which the
Registration Default remains uncured, up to a maximum additional interest rate
of 200 basis points per annum in excess of the stated interest rate on the
Notes; provided that the Company shall in no event be required to pay liquidated
damages for more than one Registration Default at any given time.
Notwithstanding anything to the contrary set forth herein, (1) upon filing of
the Exchange Offer Registration Statement (and/or, if applicable, the Shelf
Registration Statement), in the case of (i) above, (2) upon the effectiveness of
the Exchange Offer Registration Statement (and/or, if applicable, the Shelf
Registration Statement), in the case of (ii) above, (3) upon Consummation of the
Exchange Offer, in the case of (iii) above, or (4) upon the filing of a
post-effective amendment to the Registration Statement or an additional
Registration Statement that causes the Exchange Offer Registration Statement
(and/or, if applicable, the Shelf Registration Statement) to again be declared
effective or made usable in the case of (iv) above,
6
<PAGE> 8
the liquidated damages payable with respect to the Transfer Restricted
Securities as a result of such clause (i), (ii), (iii) or (iv), as applicable,
shall cease.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each Interest Payment Date, as more fully set forth in the Indenture and the
Series A Notes ; provided, however, that the year of such Interest Payment Date
for the purposes of this Section shall be the year of any such Registration
Default ("Damages Payment Date"). Notwithstanding the fact that any securities
for which liquidated damages are due cease to be Transfer Restricted Securities,
all obligations of the Company to pay liquidated damages with respect to
securities shall survive until such time as such obligations with respect to
such securities shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the Exchange
Offer, the Company shall (x) comply with all applicable provisions of Section
6(c) below, (y) use all reasonable efforts to effect such exchange and to permit
the resale of Series B Notes by Broker-Dealers that tendered in the Exchange
Offer Series A Notes that such Broker-Dealer acquired for its own account as a
result of its market making activities or other trading activities (other than
Series A Notes acquired directly from the Company or any of its Affiliates)
being sold in accordance with the intended method or methods of distribution
thereof, and (z) comply with all of the following provisions:
(i) If, following the date hereof there has been announced a change
in Commission policy with respect to exchange offers such as the Exchange
Offer, that in the reasonable opinion of counsel to the Company raises a
substantial question as to whether the Exchange Offer is permitted by
applicable federal law, the Company hereby agrees to seek a no-action
letter or other favorable decision from the Commission allowing the
Company to Consummate an Exchange Offer for such Transfer Restricted
Securities. The Company hereby agrees to pursue the issuance of such a
decision to the Commission staff level. In connection with the foregoing,
the Company hereby agrees to take all such other actions as may be
requested by the Commission or otherwise required in connection with the
issuance of such decision, including without limitation (A) participating
in telephonic conferences with the Commission, (B) delivering to the
Commission staff an analysis prepared by counsel to the Company setting
forth the legal bases, if any, upon which such counsel has concluded that
such an Exchange Offer should be permitted and (C) diligently pursuing a
resolution (which need not be favorable) by the Commission staff.
(ii) As a condition to its participation in the Exchange Offer, each
Holder of Transfer Restricted Securities (including, without limitation,
any Holder who is a Broker Dealer) shall furnish, upon the request of the
Company, prior to the Consummation of the Exchange Offer, a written
representation to the Company (which may be contained in the letter of
transmittal contemplated by the Exchange Offer Registration Statement) to
the effect that (A) it is not an Affiliate of the Company, (B) it is not
engaged in, and does not intend to engage in, and has no arrangement or
understanding with any person to
7
<PAGE> 9
participate in, a distribution of the Series B Notes to be issued in the
Exchange Offer and (C) it is acquiring the Series B Notes in its ordinary
course of business. As a condition to its participation in the Exchange
Offer each Holder using the Exchange Offer to participate in a
distribution of the Series B Notes shall acknowledge and agree that, if
the resales are of Series B Notes obtained by such Holder in exchange for
Series A Notes acquired directly from the Company or an Affiliate thereof,
it (1) could not, under Commission policy as in effect on the date of this
Agreement, rely on the position of the Commission enunciated in Morgan
Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings
Corporation (available May 13, 1988), as interpreted in the Commission's
letter to Shearman & Sterling dated July 2, 1993, and similar no-action
letters (including, if applicable, any no-action letter obtained pursuant
to clause (i) above), and (2) must comply with the registration and
prospectus delivery requirements of the Act in connection with a secondary
resale transaction and that such a secondary resale transaction must be
covered by an effective registration statement containing the selling
security holder information required by Item 507 or 508, as applicable, of
Regulation S-K.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company shall provide a supplemental letter to the
Commission (A) stating that the Company is registering the Exchange Offer
in reliance on the position of the Commission enunciated in Exxon Capital
Holdings Corporation (available May 13, 1988), Morgan Stanley and Co.,
Inc. (available June 5, 1991) as interpreted in the Commission's letter to
Shearman & Sterling dated July 2, 1993, and, if applicable, any no-action
letter obtained pursuant to clause (i) above, (B) including a
representation that the Company has not entered into any arrangement or
understanding with any Person to distribute the Series B Notes to be
received in the Exchange Offer and that, to the best of the Company's
information and belief, each Holder participating in the Exchange Offer is
acquiring the Series B Notes in its ordinary course of business and has no
arrangement or understanding with any Person to participate in the
distribution of the Series B Notes received in the Exchange Offer and (C)
any other undertaking or representation required by the Commission as set
forth in any no-action letter obtained pursuant to clause (i) above, if
applicable.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company shall (i) comply with all the provisions of
Section 6(c) below and use all reasonable efforts to effect such registration to
permit the sale of the Transfer Restricted Securities being sold in accordance
with the intended method or methods of distribution thereof (as indicated in the
information furnished to the Company pursuant to Section 4(b) hereof), and
pursuant thereto the Company will prepare and file with the Commission a
Registration Statement relating to the registration on any appropriate form
under the Act, which form shall be available for the sale of the Transfer
Restricted Securities in accordance with the intended method or methods of
distribution thereof within the time periods and otherwise in accordance with
the provisions hereof, and
(ii) issue, upon the request of any Holder or purchaser of Series A
Notes covered by any Shelf Registration Statement contemplated by this
Agreement, Series B Notes
8
<PAGE> 10
having an aggregate principal amount equal to the aggregate principal amount of
Series A Notes sold pursuant to the Shelf Registration Statement and surrendered
to the Company for cancellation; the Company shall register Series B Notes on
the Shelf Registration Statement for this purpose and issue the Series B Notes
to the purchaser(s) of securities subject to the Shelf Registration Statement in
the names as such purchaser(s) shall designate.
(c) General Provisions. In connection with any Registration Statement and
any related Prospectus required by this Agreement, the Company shall:
(i) use all reasonable efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements for
the period specified in Section 3 or 4 of this Agreement, as applicable.
Upon the occurrence of any event that would cause any such Registration
Statement or the Prospectus contained therein (A) to contain an untrue
statement of material fact or omit to state any material fact necessary to
make the statements therein not misleading or (B) not to be effective and
usable for resale of Transfer Restricted Securities during the period
required by this Agreement, the Company shall file promptly an appropriate
amendment to such Registration Statement curing such defect, and, if
Commission review is required, use its best efforts to cause such
amendment to be declared effective as soon as practicable.
(ii) use all reasonable efforts to prepare and file with the
Commission such amendments and post-effective amendments to the applicable
Registration Statement as may be necessary to keep such Registration
Statement effective for the applicable period set forth in Section 3 or 4
hereof, as the case may be; cause the Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the Act, and to comply fully with Rules 424,
430A and 462, as applicable, under the Act in a timely manner; and comply
with the provisions of the Act with respect to the disposition of all
securities covered by such Registration Statement during the applicable
period in accordance with the intended method or methods of distribution
by the sellers thereof set forth in such Registration Statement or
supplement to the Prospectus;
(iii) advise each Holder promptly and, if requested by such, confirm
such advice in writing, (A) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect
to any applicable Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any request by the
Commission for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement under the Act
or of the suspension by any state securities commission of the
qualification of the Transfer Restricted Securities for offering or sale
in any jurisdiction, or the initiation of any proceeding for any of the
preceding purposes, (D) of the existence of any fact or the happening of
any event that makes any statement of a material fact made in the
Registration Statement, the Prospectus, any amendment or supplement
thereto or any document incorporated by reference therein untrue, or that
requires the making of any additions to or changes in the Registration
Statement in order
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to make the statements therein not misleading, or that requires the making
of any additions to or changes in the Prospectus in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. If at any time the Commission shall issue any
stop order suspending the effectiveness of the Registration Statement, or
any state securities commission or other regulatory authority shall issue
an order suspending the qualification or exemption from qualification of
the Transfer Restricted Securities under state securities or Blue Sky
laws, the Company shall use all reasonable efforts to obtain the
withdrawal or lifting of such order at the earliest possible time;
(iv) subject to Section 6(c)(i), if any fact or event contemplated
by Section 6(c)(iii)(D) above shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus will not
contain an 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;
(v) furnish to each Holder in connection with such exchange or sale,
if any, before filing with the Commission, copies of any Registration
Statement or any Prospectus included therein or any amendments or
supplements to any such Registration Statement or Prospectus (including
all documents incorporated by reference after the initial filing of such
Registration Statement), which documents will be subject to the review and
comment of such Holders in connection with such sale, if any, for a period
of at least five Business Days, and the Company will not file any such
Registration Statement or Prospectus or any amendment or supplement to any
such Registration Statement or Prospectus (including all such documents
incorporated by reference) to which such Holders shall reasonably object
within five Business Days after the receipt thereof. A Holder shall be
deemed to have reasonably objected to such filing if such Registration
Statement, amendment, Prospectus or supplement, as applicable, as proposed
to be filed, contains an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not
misleading or fails to comply with the applicable requirements of the Act;
(vi) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to each Holder in connection with such
exchange or sale, if any, make the Company's representatives available for
discussion of such document and other customary due diligence matters, and
include such information in such document prior to the filing thereof as
such Holders may reasonably request;
(vii) make available, at reasonable times, for inspection by each
Holder and any attorney or accountant retained by such Holders, all
financial and other records, pertinent corporate documents of the Company
and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such Holder, attorney or
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accountant in connection with such Registration Statement or any
post-effective amendment thereto subsequent to the filing thereof and
prior to its effectiveness; provided, however, that such persons shall
first agree in writing with the Company that any information that is
reasonably and in good faith designated by the Company in writing as
confidential at the time of delivery of such information shall be kept
confidential by such persons, unless (i) disclosure of such information is
required by court or administrative order or is necessary to respond to
inquires of regulatory authorities, (ii) disclosure of such information is
required by law (including any disclosure requirements pursuant to Federal
securities laws in connection with the filing of any Registration
Statement or the use of any Prospectus referred to in this Agreement),
(iii) such information becomes generally available to the public other
than as a result of a disclosure or failure to safeguard by any such
person or (iv) such information becomes available to any such person from
a source other than the Company and such source is not bound by a
confidentiality agreement.
(viii) if requested by any Holders in connection with such exchange
or sale, promptly include in any Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as such Holders may reasonably request to have included
therein, including, without limitation, information relating to the "Plan
of Distribution" of the Transfer Restricted Securities; and make all
required filings of such Prospectus supplement or post-effective amendment
as soon as practicable after the Company is notified of the matters to be
included in such Prospectus supplement or post-effective amendment;
(ix) furnish to each Holder in connection with such exchange or sale
without charge, at least one copy of the Registration Statement, as first
filed with the Commission, and of each amendment thereto, including all
documents incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference);
(x) deliver to each Holder without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons reasonably may request; the Company
hereby consents to the use (in accordance with law) of the Prospectus and
any amendment or supplement thereto by each selling Holder in connection
with the offering and the sale of the Transfer Restricted Securities
covered by the Prospectus or any amendment or supplement thereto;
(xi) upon the request of any Holder, enter into such agreements
(including underwriting agreements) and make such representations and
warranties and take all such other actions in connection therewith in
order to expedite or facilitate the disposition of the Transfer Restricted
Securities pursuant to any applicable Registration Statement contemplated
by this Agreement as may be reasonably requested by any Holder in
connection with any sale or resale pursuant to any applicable Registration
Statement. In such connection, the Company shall:
(A) upon request of any Holder, furnish (or in the case of
paragraphs (2) and (3), use all reasonable efforts to cause to be
furnished) to each Holder, upon
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<PAGE> 13
Consummation of the Exchange Offer or upon the effectiveness of the
Shelf Registration Statement, as the case may be:
(1) a certificate, dated such date, signed on behalf of the
Company by (x) the President or any Vice President and (y) a
principal financial or accounting officer of the Company,
confirming, as of the date thereof, the matters set forth in
Sections 6(ff), 9(a) and 9(b) of the Purchase Agreement and such
other similar matters as such Holders may reasonably request;
(2) an opinion, dated the date of Consummation of the Exchange
Offer or the date of effectiveness of the Shelf Registration
Statement, as the case may be, of counsel for the Company covering
matters similar to those set forth in paragraph (e), (f) and (g) of
Section 9 of the Purchase Agreement and such other matter as such
Holder may reasonably request, and in any event including a
statement to the effect that such counsel has participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the
Company and have considered the matters required to be stated
therein and the statements contained therein, although such counsel
has not independently verified the accuracy, completeness or
fairness of such statements; and that such counsel advises that, on
the basis of the foregoing (relying as to materiality to the extent
such counsel deems appropriate upon the statements of officers and
other representatives of the Company and without independent check
or verification), no facts came to such counsel's attention that
caused such counsel to believe that the applicable Registration
Statement, at the time such Registration Statement or any
post-effective amendment thereto became effective and, in the case
of the Exchange Offer Registration Statement, as of the date of
Consummation of the Exchange Offer, contained an untrue statement of
a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or that the Prospectus contained in such Registration
Statement as of its date and, in the case of the opinion dated the
date of Consummation of the Exchange Offer, as of the date of
Consummation, contained an untrue statement of a material fact or
omitted 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. Without limiting the foregoing, such
counsel may state further that such counsel assumes no
responsibility for, and has not independently verified, the
accuracy, completeness or fairness of the financial statements,
notes and schedules and other financial data included in any
Registration Statement contemplated by this Agreement or the related
Prospectus; and
(3) a customary comfort letter, dated the date of Consummation of
the Exchange Offer, or as of the date of effectiveness of the Shelf
Registration Statement, as the case may be, from the Company's
independent accountants, in the customary form and covering matters
of the type
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<PAGE> 14
customarily covered in comfort letters to underwriters in
connection with underwritten offerings, and affirming the matters
set forth in the comfort letters delivered pursuant to Section 9(i)
of the Purchase Agreement; and
(B) deliver such other documents and certificates as may be
reasonably requested by the selling Holders to evidence compliance with
the matters covered in clause (A) above and with any customary
conditions contained in the any agreement entered into by the Company
pursuant to this clause (xi);
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders and their counsel in
connection with the registration and qualification of the Transfer
Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders may request and do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the
applicable Registration Statement; provided, however, that the Company
shall not be required to register or qualify as a foreign corporation
where it is not now so qualified or to take any action that would subject
it to the service of process in suits or to taxation, other than as to
matters and transactions relating to the Registration Statement, in any
jurisdiction where it is not now so subject;
(xiii) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Transfer Restricted
Securities to be sold and not bearing any restrictive legends; and to
register such Transfer Restricted Securities in such denominations and
such names as the selling Holders may request at least two Business Days
prior to such sale of Transfer Restricted Securities;
(xiv) use all reasonable efforts to cause the disposition of the
Transfer Restricted Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof to
consummate the disposition of such Transfer Restricted Securities, subject
to the proviso contained in clause (xii) above;
(xv) provide a CUSIP or ISIN number, as applicable, for all
Transfer Restricted Securities not later than the effective date of a
Registration Statement covering such Transfer Restricted Securities and
provide the Trustee under the Indenture with printed certificates for the
Transfer Restricted Securities which are in a form eligible for deposit
with the Depository Trust Company;
(xvi) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to
its security holders with regard to any applicable Registration Statement,
on a timely basis, a consolidated earnings statement meeting the
requirements of Rule 158 (which need not be audited) covering a
twelve-month period beginning after the effective date of the Registration
Statement (as such term is defined in paragraph (c) of Rule 158 under the
Act);
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<PAGE> 15
(xvii) cause the Indenture to be qualified under the TIA not later
than the effective date of the first Registration Statement required by
this Agreement and, in connection therewith, cooperate with the Trustee
and the Holders to effect such changes to the Indenture as may be required
for such Indenture to be so qualified in accordance with the terms of the
TIA; and execute and use all reasonable efforts to cause the Trustee to
execute, all documents that may be required to effect such changes and all
other forms and documents required to be filed with the Commission to
enable such Indenture to be so qualified in a timely manner; and
(xviii) provide promptly to each Holder, upon request, each document
filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act.
(d) The Company may require each seller of Transfer Restricted Securities
as to which any registration is being effected to furnish to the Company such
information regarding the distribution of such Transfer Restricted Securities as
is required by law to be disclosed in the applicable Registration Statement and
the Company may exclude from such registration the Transfer Restricted
Securities of any seller who reasonably fails to furnish such information within
a reasonable time after receiving such request. Each Holder agrees, by the
acquisition of Transfer Restricted Securities, and agrees to confirm such
agreement in writing upon request of the Company, to notify the Company as
promptly as practicable of any inaccuracy or change in information previously
furnished by such Holder to the Company or of the occurrence of any event as a
result of which any Prospectus relating to such registration contains or would
contain an untrue statement of a material fact regarding such Holder or such
Holder's intended method of distribution of such Transfer Restricted Securities,
or omits to state any material fact regarding such Holder or such Holder's
intended method of distribution of such Transfer Restricted Securities,
necessary to make the statements therein, in light of the circumstances then
existing, not misleading and promptly to furnish to the Company any additional
information required to correct and update any previously furnished information
or required so that such Prospectus shall not contain, with respect to such
Holder or the distribution of such Transfer Restricted Securities, an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances then existing, not
misleading.
SECTION 7. RESTRICTIONS ON HOLDERS. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(iii)(C) or any notice from the Company of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof (in each case, a
"Suspension Notice"), such Holder will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable Registration Statement
until (i) such Holder has received copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is
advised in writing by the Company that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus (in each case, the "Recommencement
Date"). Each Holder receiving a Suspension Notice hereby agrees that it will
either (i) destroy any Prospectuses, other than permanent file
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<PAGE> 16
copies, then in such Holder's possession which have been replaced by the Company
with more recently dated Prospectuses or (ii) deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, then in such
Holder's possession of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of the Suspension Notice. The
time period regarding the effectiveness of such Registration Statement set forth
in Section 3 or 4 hereof, as applicable, shall be extended by a number of days
equal to the number of days in the period from and including the date of
delivery of the Suspension Notice to the date of delivery of the Recommencement
Date.
SECTION 8. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or compliance
with this Agreement will be borne by the Company, regardless of whether a
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees and expenses; (ii) all fees and expenses of
compliance with federal securities and state Blue Sky or securities laws; (iii)
all expenses of printing (including printing certificates for the Series B Notes
to be issued in the Exchange Offer and printing of Prospectuses), messenger and
delivery services and telephone; (iv) all fees and disbursements of counsel for
the Company and the, subject to Section 8(b) below, Holders of Transfer
Restricted Securities; (v) all application and filing fees in connection with
listing the Series B Notes on a national securities exchange or automated
quotation system pursuant to the requirements hereof; and (vi) all fees and
disbursements of independent certified public accountants of the Company, OPI
and Omnitel (including the expenses of any special audit and comfort letters
required by or incident to such performance).
The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Company. Notwithstanding the foregoing or anything in this Agreement to the
contrary, each Holder of the Transfer Restricted Securities being registered
shall, if applicable, pay all commissions, placement agent fees and underwriting
discounts and commissions with respect to any Transfer Restricted Securities
sold by it and the fees and disbursements of any counsel or other advisors or
experts retained by such Holders (severally or jointly), other than counsel
referred to in Section 6(b) above.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company will reimburse the
Initial Purchasers and the Holders of Transfer Restricted Securities who are
tendering Series A Notes into in the Exchange Offer and/or selling or reselling
Series A Notes or Series B Notes pursuant to the "Plan of Distribution"
contained in the Exchange Offer Registration Statement or the Shelf Registration
Statement, as applicable, for the reasonable fees and disbursements of not more
than one counsel, who shall be Latham & Watkins, unless another firm shall be
chosen by the Holders of a majority in principal amount of the Transfer
Restricted Securities for whose benefit such Registration Statement is being
prepared.
SECTION 9. INDEMNIFICATION
(a) The Company agrees, to indemnify and hold harmless each Holder, its
directors, officers and each Person, if any, who controls such Holder (within
the meaning of Section 15 of
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<PAGE> 17
the Act or Section 20 of the Exchange Act), from and against any and all losses,
claims, damages, liabilities, judgments, (including without limitation, any
legal or other expenses incurred in connection with investigating or defending
any matter, including any action that could give rise to any such losses,
claims, damages, liabilities or judgments) caused by any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement, preliminary prospectus or Prospectus (or any amendment or supplement
thereto) provided by the Company to any Holder or any prospective purchaser of
Series B Notes or registered Series A Notes, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages, liabilities or judgments are caused by an untrue
statement or omission or alleged untrue statement or omission that is based upon
information relating to any of the Holders furnished in writing to the Company
by any of the Holders; provided that the foregoing indemnity with respect to any
preliminary Prospectus shall not inure to the benefit of any Indemnified Person
from whom the person asserting such losses, claims, damages, liabilities and
judgments purchased securities if such untrue statement or omission or alleged
untrue statement or omission made in such preliminary Prospectus is eliminated
or remedied in the Prospectus and a copy of the Prospectus shall not have been
furnished to such person in a timely manner due to the wrongful action or
wrongful inaction of such Indemnified Person (provided that the Company has
delivered the Prospectus to such indemnified Person in requisite quantity on a
timely basis to permit such delivery or sending).
(b) Each Holder of Transfer Restricted agrees, severally and not jointly,
to indemnify and hold harmless the Company, and its directors and officers, and
each person, if any, who controls (within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act) the Company to the same extent as the
foregoing indemnity from the Company set forth in section (a) above, but only
with reference to information relating to such Holder furnished in writing to
the Company by such Holder expressly for use in any Registration Statement. In
no event shall any Holder, its directors, officers or any Person who controls
such Holder be liable or responsible for any amount in excess of the amount by
which the total amount received by such Holder with respect to its sale of
Transfer Restricted Securities pursuant to a Registration Statement exceeds (i)
the amount paid by such Holder for such Transfer Restricted Securities and (ii)
the amount of any damages that such Holder, its directors, officers or any
Person who controls such Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission.
(c) In case any action shall be commenced involving any person in respect
of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"indemnified party"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying person") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 8(a) and 8(b), a Holder shall not be required to assume the
defense of such action pursuant to this Section 8(c), but may employ separate
counsel and participate in the defense thereof, but the fees and expenses of
such counsel, except as provided below, shall be at the expense of the Holder).
Any indemnified party shall have the right to employ separate counsel in any
such action and
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participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the indemnified party unless (i) the employment of
such counsel shall have been specifically authorized in writing by the
indemnifying party, (ii) the indemnifying party shall have failed to assume the
defense of such action or employ counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any such action (including any
impleaded parties) include both the indemnified party and the indemnifying
party, and the indemnified party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party). In any such case, the indemnifying party
shall not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by a majority of the
Holders, in the case of the parties indemnified pursuant to Section 8(a), and by
the Company, in the case of parties indemnified pursuant to Section 8(b). The
indemnifying party shall indemnify and hold harmless the indemnified party from
and against any and all losses, claims, damages, liabilities and judgments by
reason of any settlement of any action (i) effected with its written consent or
(ii) effected without its written consent if the settlement is entered into more
than forty-five business days after the indemnifying party shall have received a
request from the indemnified party for reimbursement for the fees and expenses
of counsel (in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the indemnifying
party shall have failed to comply with such reimbursement request and such
indemnifying party shall have received notice of the terms of the settlement at
least 30 days prior to such settlement being entered into. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement or compromise of, or consent to the entry of judgment with respect
to, any pending or threatened action in respect of which the indemnified party
is or could have been a party and indemnity or contribution may be or could have
been sought hereunder by the indemnified party, unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability on claims that are or could have been the subject
matter of such action and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party.
(d) To the extent that the indemnification provided for in this Section 8
is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, on the one
hand, and the Holders, on the other hand, from their sale of Transfer Restricted
Securities or (ii) if the allocation provided by clause 8(d)(i) is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 8(d)(i) above but also the relative
fault of the Company, on the one hand, and of the Holder, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative fault of the Company, on the one hand,
and
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of the Holder, on the other hand, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company, on the one hand, or by the Holder, on the
other hand, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, claims, damages,
liabilities and judgments referred to above shall be deemed to include, subject
to the limitations set forth in the second paragraph of Section 8(a), any legal
or other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim.
The Company and each Holder agree that it would not be just and equitable
if contribution pursuant to this Section 8(d) were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities or judgments referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any matter, including any action
that could have given rise to such losses, claims, damages, liabilities or
judgments. Notwithstanding the provisions of this Section 8, no Holder, its
directors, its officers or any Person, if any, who controls such Holder shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the total received by such Holder with respect to the sale of Transfer
Restricted Securities pursuant to a Registration Statement exceeds (i) the
amount paid by such Holder for such Transfer Restricted Securities and (ii) the
amount of any damages which such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. 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. The Holders'
obligations to contribute pursuant to this Section 8(c) are several in
proportion to the respective principal amount of Transfer Restricted Securities
held by each Holder hereunder and not joint.
SECTION 10. RULE 144A AND RULE 144
The Company agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Company (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make
available, upon request of any Holder, to such Holder or beneficial owner of
Transfer Restricted Securities in connection with any sale thereof and any
prospective purchaser of such Transfer Restricted Securities designated by such
Holder or beneficial owner, the information required by Rule 144A(d)(4) under
the Act in order to permit resales of such Transfer Restricted Securities
pursuant to Rule 144A, and (ii) is subject to Section 13 or 15 (d) of the
Exchange Act, to make all filings required thereby in a timely manner in order
to permit resales of such Transfer Restricted Securities pursuant to Rule 144.
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SECTION 11. MISCELLANEOUS
(a) Remedies. The Company acknowledges and agrees that any failure by the
Company to comply with its obligations under Sections 3 and 4 hereof may result
in material irreparable injury to the Initial Purchasers or the Holders for
which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, the Initial Purchasers or any Holder may obtain such relief as may be
required to specifically enforce the Company's obligations under Sections 3 and
4 hereof. The Company further agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not, on or after the date
of this Agreement, enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The Company has not previously
entered into any agreement granting any registration rights with respect to its
securities, except with respect to the Convertible Subordinated Notes, to any
Person. The rights granted to the Holders hereunder do not in any way conflict
with and are not inconsistent with the rights granted to the holders of the
Company's securities under any agreement in effect on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 10(c)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities (excluding Transfer Restricted Securities held by the
Company or its Affiliates). Notwithstanding the foregoing, a waiver or consent
to departure from the provisions hereof that relates exclusively to the rights
of Holders whose Transfer Restricted Securities are being tendered pursuant to
the Exchange Offer, and that does not affect directly or indirectly the rights
of other Holders whose Transfer Restricted Securities are not being tendered
pursuant to such Exchange Offer, may be given by the Holders of a majority of
the outstanding principal amount of Transfer Restricted Securities subject to
such Exchange Offer.
(d) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right to
enforce such agreements directly to the extent they may deem such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
19
<PAGE> 21
(ii) if to the Company:
Cellular Communications International, Inc.
110 East 59th Street
New York, NY 10022
Telecopier No.: (212) 906-8497
Attention: Chief Financial Officer
With a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Telecopier No.: (212) 735-2000
Attention: Thomas Kennedy, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders; provided, that nothing herein shall be deemed to permit any assignment,
transfer or other disposition of Transfer Restricted Securities in violation of
the terms hereof or of the Purchase Agreement or the Indenture. If any
transferee of any Holder shall acquire Transfer Restricted Securities in any
manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Transfer Restricted Securities such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement, including the restrictions on resale set
forth in this Agreement and, if applicable, the Purchase Agreement, and such
Person shall be entitled to receive the benefits hereof.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
20
<PAGE> 22
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
21
<PAGE> 23
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
CELLULAR COMMUNICATIONS INTERNATIONAL, INC.
By:/s/ Richard J. Lubasch
-------------------------
Name: RICHARD J. LUBASCH
Title: SENIOR VICE PRESIDENT
<PAGE> 24
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
By: /s/ Curtis Dickinson
-------------------------
Name: CURTIS DICKINSON
Title: VICE PRESIDENT
DONALDSON, LUFKIN & JENRETTE INTERNATIONAL
By: /s/ Po Masmejean
-------------------------
Name: PO MASMEJEAN
Title: MANAGING DIRECTOR
WASSERSTEIN PERELLA SECURITIES, INC.
By:
------------------------
Name:
Title:
<PAGE> 25
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
By:
------------------------
Name:
Title:
DONALDSON, LUFKIN & JENRETTE INTERNATIONAL
By:
------------------------
Name:
Title:
WASSERSTEIN PERELLA SECURITIES, INC.
By: /s/ James C. Kingsbery
------------------------
Name: JAMES C. KINGSBERY
Title: VICE PRESIDENT
<PAGE> 1
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
May 12, 1998
Cellular Communications International, Inc.
110 East 59th Street
New York, NY 10022
Re: Cellular Communications International, Inc.
Registration Statement on Form S-4
Ladies and Gentlemen:
We have acted as special counsel to Cellular Communications
International, Inc., a Delaware corporation (the "Company"), in connection with
the public offering of Euro 235,000,000 aggregate principal amount of the
Company's 9 1/2% Senior Discount Notes due 2005 (the "Notes"). The Notes are to
be issued pursuant to an exchange offer (the "Exchange Offer") in exchange for a
like principal amount of the issued and outstanding 9 1/2% Senior Discount Notes
due 2005 of the Company (the "Old Notes") under the Indenture, dated as of March
18, 1998 (the "Indenture"), by and among the Company and The Chase Manhattan
Bank, as Trust ee (the "Trustee"), as contemplated by the Registration Rights
Agreement, dated March 18, 1998 (the "Registration Rights Agreement"), by and
among the Company, Donaldson, Lufkin & Jenrette Securities Corporation,
Donaldson, Lufkin & Jenrette International and Wasserstein Perella Securities,
Inc.
This opinion is being furnished in accordance with the
requirements of Item 601(b)(5) of Regulation S-K under the Securities Act of
1933, as amended (the "Act").
1
<PAGE> 2
Cellular Communications International, Inc.
May 12, 1998
Page 2
In connection with this opinion, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of (i) the
Company's Registration Statement on Form S-4 as filed with the Securities and
Exchange Com mission (the "Commission") on April 15, 1998 under the Act (the
"Registration Statement"); (ii) an executed copy of the Registration Rights
Agreement; (iii) an executed copy of the Indenture; (iv) the Restated
Certificate of Incorporation of the Company, as amended to date; (v) the
By-Laws of the Company, as amended to date; (vi) certain resolutions adopted by
the Board of Directors of the Company relating to the Exchange Offer, the
issuance of the Old Notes and the Notes, the Indenture and related matters;
(vii) the Form T-1 of the Trustee filed as an exhibit to the Registra tion
Statement; and (viii) the form of the Notes. We have also examined originals or
copies, certified or otherwise identified to our satisfaction, of such records
of the Company and such agreements, certificates of public officials,
certificates of officers or other representatives of the Company and others,
and such other documents, certificates and records as we have deemed necessary
or appropriate as a basis for the opinions set forth herein.
In our examination, we have assumed the legal capacity of
all natural persons, the genuineness of all signatures, the authenticity of all
documents sub mitted to us as originals, the conformity to original documents
of all documents submitted to us as certified, conformed or photostatic copies
and the authenticity of the originals of such latter documents. In making our
examination of documents executed or to be executed by parties other than the
Company, we have assumed that such parties had or will have the power,
corporate or other, to enter into and perform all obligations thereunder and
have also assumed the due authorization by all requisite action, corporate or
other, and execution and delivery by such parties of such documents and the
validity and binding effect thereof. As to any facts material to the opinions
expressed herein which we have not independently established or verified, we
have relied upon statements and representations of officers and other
representatives of the Company and others.
In relation to the opinions set forth below, we note that
the Indenture provides that all monetary rights and obligations in respect of
the Notes shall be performed in European Currency Units ("ECUs") until the
third stage of European economic and monetary union when such rights and
obligations will be performed in Euros (as defined below), and we bring to your
attention Title 16 of the New York General Obligations Law (the "GOL"). Title
16 of the GOL provides, among other
<PAGE> 3
Cellular Communications International, Inc.
May 12, 1998
Page 3
things, that on the implementation from time to time of Economic and Monetary
Union in the Member States of the European Union in accordance with the Treaty
on European Union by the adoption of participating Member states of a single
currency ("the Euro"), if the subject or medium of payment of a contract,
security or instru ment is the ECU, the Euro will be a commercially reasonable
and substantial equivalent that may be either (a) used in determining the value
of the ECU or (b) tendered in accordance with the regulations adopted by the
Council of the European Union. In addition, Title 16 of the GOL provides that
none of (a) the introduction of the Euro, (b) the tendering of Euros in
connection with any obligation in accordance with clauses (a) or (b) of the
immediately preceding sentence, (c) the determining of the value of any
obligation in accordance with clauses (a) or (b) of the immediately preceding
sentence or (d) the calculating or determining of the subject or medium of
payment of a contract, security or instrument with reference to interest rate
or other basis that has been substituted and replaced due to the introduction
of the Euro and that is a commercially reasonable substitute and substantial
equivalent, shall have either the effect of discharging or excusing performance
under any contract, security or instrument or give a party the right to
unilaterally alter or terminate any contract, security or instrument. Title 16
of the GOL further provides that its provisions shall not alter or impair and
shall be subject to any agreements concerning the Euro between the parties. We
note, however, that to the best of our knowledge, there has been no judicial
consideration of Title 16 of the GOL by a New York court and, in the absence of
any judicial authority, we are unable to express a view as to the
interpretation or application a New York court may give to Title 16 of the GOL.
With respect to the enforceability of all obligations under
the Indenture and Notes payable in Euros or in ECUs, we note that a U.S.
federal court would award a judgment only in U.S. dollars and that a judgment
of a court in the State of New York rendered in Euros or ECUs would be
converted into U.S. dollars at the rate of exchange prevailing on the date of
entry of such judgment.
Members of our firm are admitted to the bar in the State of
New York,and we do not express any opinion as to the laws of any other
jurisdiction other than the Delaware General Corporation Law.
Based upon and subject to the foregoing and the limitations,
qualifications, exceptions and assumptions set forth herein, we are of the
opinion that when the Notes have been duly executed and authenticated in
accordance with the terms of
<PAGE> 4
Cellular Communications International, Inc.
May 12, 1998
Page 4
the Indenture and have been delivered upon consummation of the Exchange Offer
against receipt of Old Notes surrendered in exchange therefor in accordance
with the terms of the Exchange Offer, the Notes will constitute valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except to the extent that enforcement thereof may
be limited by (1) bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect relating
to creditors' rights generally, (2) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity), (3)
requirements that a claim with respect to any Notes (or a judgment denominated
other than in U.S. dollars in respect of such claim) be converted into U.S.
dollars at a rate of exchange prevailing on a date determined pursuant to
applicable law and (4) governmental authority to limit, delay or prohibit the
making of, payments in foreign currency, currency units or composite
currencies, outside the United States.
In rendering the opinions set above, we have assumed that
the execution, authentication and delivery by the Company of the Notes do not
and will not violate, conflict with or constitute a default under (i) any
agreement or instrument to which the Company or its properties is subject
(except that we do not make the assumption set forth in this clause (i) with
respect to the Company's Restated Certifi cate of Incorporation, the Company's
By-Laws, the Indenture, or the Registration Rights Agreement), (ii) any law,
rule, or regulation to which the Company is subject (except that we do not make
the assumption set forth in this clause (ii) with respect to the Delaware
General Corporation Law and those laws, rules and regulations of the State of
New York and the United States of America, in each case, which, in our
experience, are normally applicable to transactions of the type contemplated by
the Exchange Offer (other than the United States federal securities laws, state
securities or Blue Sky laws, antifraud laws and the rules and regulations of
the National Asso ciation of Securities Dealers, Inc.), but without our having
made any special investi gation with respect to any other laws, rules or
regulations), (iii) any judicial or regulatory order or decree of any
governmental authority or (iv) any consent, ap proval, license, authorization
or validation of, or filing, recording or registration with any governmental
authority.
<PAGE> 5
Cellular Communications International, Inc.
May 12, 1998
Page 5
We hereby consent to the filing of this opinion with the
Commission as an exhibit to the Registration Statement. We also consent to the
reference to our firm under the caption "Legal Matters" in the Registration
Statement. In giving this consent, we do not thereby admit that we are included
in the category of persons whose consent is required under Section 7 of the Act
or the rules and regulations of the Commission.
Very truly yours,
/s/ SKADDEN, ARPS, SLATE, MEAGHER &
FLOM LLP
<PAGE> 1
-------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
---------------------------------------------
CELLULAR COMMUNICATIONS INTERNATIONAL, INC.
(Exact name of obligor as specified in its charter)
DELAWARE 13-3221852
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
110 EAST 59TH STREET
NEW YORK, NEW YORK 10022
(Address of principal executive offices) (Zip Code)
9 1/2% SENIOR DISCOUNT NOTES DUE 2005
(Title of the indenture securities)
<PAGE> 2
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
-2-
<PAGE> 3
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 20th day of April 1998.
THE CHASE MANHATTAN BANK
By /s/Andrew M. Deck
----------------------
Andrew M. Deck
Vice President
- 3 -
<PAGE> 4
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business December 31, 1997, in accordance
with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN MILLIONS
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ............................ $ 12,428
Interest-bearing balances .................... 3,428
Securities: .......................................
Held to maturity securities ....................... 2,561
Available for sale securities ..................... 43,058
Federal funds sold and securities purchased under
agreements to resell ......................... 29,633
Loans and lease financing receivables:
Loans and leases, net of unearned income ..... $129,260
Less: Allowance for loan and lease losses .... 2,783
Less: Allocated transfer risk reserve ........ 0
--------
Loans and leases, net of unearned income,
allowance, and reserve ....................... 126,477
Trading Assets .................................... 62,575
Premises and fixed assets (including capitalized
leases) ........................................... 2,943
Other real estate owned ........................... 295
Investments in unconsolidated subsidiaries and
associated companies ......................... 231
Customers' liability to this bank on acceptances
outstanding .................................. 1,698
Intangible assets ................................. 1,466
Other assets ...................................... 10,268
--------
TOTAL ASSETS ...................................... $297,061
========
</TABLE>
- 4 -
<PAGE> 5
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C>
Deposits
In domestic offices .............................................................. $94,524
Noninterest-bearing .............................................................. $ 39,487
Interest-bearing ................................................................. 55,037
--------
In foreign offices, Edge and Agreement, subsidiaries and IBF's ................... 71,162
Noninterest-bearing .............................................................. $ 3,205
Interest-bearing ................................................................. 67,957
Federal funds purchased and securities sold under agreements to repurchase ............ 43,181
Demand notes issued to the U.S. Treasury .............................................. 1,000
Trading liabilities ................................................................... 48,903
Otherborrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
With a remaining maturity of one year or less .................................... 3,599
With a remaining maturity of more than one year
through three years ....................................................... 253
With a remaining maturity of more than three years ............................... 132
Bank's liability on acceptances executed and outstanding .............................. 1,698
Subordinated notes and debentures ..................................................... 5,715
Other liabilities ..................................................................... 9,896
TOTAL LIABILITIES ..................................................................... 280,063
--------
EQUITY CAPITAL
Perpetual preferred stock and related surplus ......................................... 0
Common stock .......................................................................... 1,211
Surplus (exclude all surplus related to preferred stock) ............................. 10,291
Undivided profits and capital reserves ................................................ 5,502
Net unrealized holding gains (losses) on available-for-sale securities ................ (22)
Cumulative foreign currency translation adjustments ................................... 16
TOTAL EQUITY CAPITAL .................................................................. 16,998
--------
TOTAL LIABILITIES AND EQUITY CAPITAL .................................................. $297,061
========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR. )
-5-
<PAGE> 1
LETTER OF TRANSMITTAL
CELLULAR COMMUNICATIONS INTERNATIONAL, INC.
OFFER FOR ALL OUTSTANDING
9 1/2% SENIOR DISCOUNT NOTES DUE 2005
IN EXCHANGE FOR
9 1/2% SENIOR DISCOUNT NOTES DUE 2005
PURSUANT TO THE PROSPECTUS, DATED MAY 13, 1998
THIS EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON JUNE 12,
1998, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE WITHDRAWN PRIOR TO
5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
Delivery To: The Chase Manhattan Bank, as Exchange Agent
In New York
<TABLE>
<S> <C> <C>
By Facsimile: By Mail, By Hand and Overnight Courier: Confirm by Telephone:
011-44-171-777-5410 The Chase Manhattan Bank Manager, Corporate Trust Operations:
Trinity Tower 011-44-171-777-5414
9 Thomas More Street
London E1 9YT
In Luxembourg
By Facsimile: By Mail, By Hand and Overnight Courier: Confirm by Telephone:
(352) 46 26 85380 Chase Manhattan Bank Luxembourg S.A. Manager, Corporate Trust Operations:
Rue Plaetis (352) 46 26 85284
L-2338, Luxembourg
</TABLE>
Delivery of this instrument to an address other than as set forth above, or
transmission of this Letter of Transmittal via facsimile other than as set forth
above, will not constitute a valid delivery of this Letter of Transmittal.
The undersigned acknowledges that he or she has received and reviewed a
prospectus dated May 13, 1998 (the "Prospectus") of Cellular Communications
International, Inc., a Delaware corporation (the "Company"), and this letter of
transmittal (the "Letter"), which together constitute the Company's offer (the
"Exchange Offer") to exchange an aggregate principal amount of up to EURO
235,000,000 of 9 1/2% Senior Discount Notes Due 2005 (the "New Notes") of the
Company for a like principal amount of the issued and outstanding 9 1/2% Senior
Discount Notes Due 2005 (the "Old Notes"), (the "Old Notes" and together with
the New Notes, the "Notes") of the Company from the holders thereof. Capitalized
terms used but not defined herein have the meanings given to them in the
Prospectus.
For each Old Note accepted for exchange, the Holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Old Note. The New Notes will bear interest from the most recent date to which
interest has been paid on the Old Notes or, if no interest has been paid on the
Old Notes, from March 18, 1998. Accordingly, registered Holders of New Notes on
the relevant record date for the first interest payment date following the
consummation of the Exchange Offer will receive interest accruing from the most
recent date to which interest has been paid or, if no interest has been paid,
from March 18, 1998. Old Notes accepted for exchange will cease to accrue
interest from and after the date of consummation of the Exchange Offer. Holders
of Old Notes whose Old Notes are accepted for exchange will not receive any
payment in respect of Accreted Value on such Old Notes otherwise payable or any
interest payment date the record date for which occurs on or after the
consummation of the Exchange Offer.
This Letter is to be completed by a holder of Old Notes either if
certificates for such Old Notes are to be forwarded herewith or if a tender is
to be made by book-entry transfer to the account maintained by the Exchange
Agent at the Euroclear System and Cedel Bank, societe anonyme (the "Book-Entry
Transfer Facility") pursuant to the procedures set
<PAGE> 2
forth in the Prospectus under "The Exchange Offer -- Book-Entry Transfer" and an
Agent's Message is not delivered. Tenders by book-entry transfer may also be
made by delivering an Agent's Message in lieu of this Letter. The term "Agent's
Message" means a message, transmitted by the Book-Entry Transfer Facility to and
received by the Exchange Agent and forming a part of a Book-Entry Confirmation
(as defined below), which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the tendering Participant, which
acknowledgment states that such Participant has received and agrees to be bound
by, and makes each of the representations and warranties contained in, this
Letter and that the Company may enforce this Letter against such Participant.
Holders of Old Notes whose certificates are not immediately available, or who
are unable to deliver their certificates or confirmation of the book-entry
tender of their Old Notes into the Exchange Agent's account at the Book-Entry
Transfer Facility (a "Book-Entry Confirmation") and all other documents required
by this Letter to the Exchange Agent on or prior to the Expiration Date, must
tender their Old Notes according to the guaranteed delivery procedures set forth
in the Prospectus under "The Exchange Offer -- Guaranteed Delivery Procedures."
See Instruction 1. Delivery of documents to the Book-Entry Transfer Facility
does not constitute delivery to the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed this
Letter to indicate the action the undersigned desires to take with respect to
the Exchange Offer.
List and check the appropriate box below the Old Notes to which this Letter
relates. If the space provided below is inadequate, the certificate numbers and
principal amount at maturity of Old Notes should be listed on a separate signed
schedule affixed hereto.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DESCRIPTION OF OLD NOTES
- ----------------------------------------------------------------------------------------------------------------------
1 2 3
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATE
PRINCIPAL PRINCIPAL
AMOUNT AT AMOUNT
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE MATURITY OF AT MATURITY
(PLEASE FILL IN, IF BLANK) NUMBER(S)* OLD NOTE(S) TENDERED**
- ----------------------------------------------------------------------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
TOTAL
- ----------------------------------------------------------------------------------------------------------------------
* Need not be completed if Old Notes are being tendered by book-entry transfer.
** Unless otherwise indicated in this column, a holder will be deemed to have tendered ALL of the Old Notes
represented by the Old Notes indicated in column 2. See Instruction 2. Old Notes tendered hereby must be in
denominations of principal amount at maturity of Euro 1,000 and any integral multiple thereof. See Instruction 1.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
[ ]CHECK HERE IF OLD SENIOR DISCOUNT NOTES ARE BEING TENDERED
[ ]CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
-----------------------------------------------------------------------------
<TABLE>
<S> <C>
Account Number
---------------------------------------- Transaction Code Number
-------------------------------
</TABLE>
2
<PAGE> 3
[ ]CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s)
-----------------------------------------------------------------------------
Window Ticket Number (if any)
-----------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
--------------------------------------------------------------------
Name of Institution which guaranteed delivery
---------------------------------------------------------------------------
IF DELIVERY BY BOOK-ENTRY TRANSFER, COMPLETE THE FOLLOWING:
<TABLE>
<S> <C>
Account Number
---------------------------------------- Transaction Code Number
-------------------------------
</TABLE>
Name of Tendering Institution
-----------------------------------------------------------------------------
[ ]CHECK HERE IF TENDERED OLD NOTES ARE ENCLOSED HEREWITH.
[ ]CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:
-----------------------------------------------------------------------------
Address:
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
3
<PAGE> 4
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount at
maturity of Old Notes indicated above. Subject to, and effective upon, the
acceptance for exchange of the Old Notes tendered hereby, the undersigned hereby
sells, assigns and transfers to, or upon the order of, the Company all right,
title and interest in and to such Old Notes as are being tendered hereby.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Old Notes
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim when the same are accepted by the Company. The
undersigned hereby irrevocably constitutes and appoints the Exchange Agent its
agent and attorney-in-fact with full power of substitution, for purposes of
delivering this Letter and the Old Notes to the Company. The Power of Attorney
granted in this paragraph shall be deemed irrevocable from and after the
Expiration Date and coupled with an interest. The undersigned hereby further
represents that any New Notes acquired in exchange for Old Notes tendered hereby
will have been acquired in the ordinary course of business of the person
receiving such New Notes, whether or not such person is the undersigned, that
neither the holder of such Old Notes nor any such other person is engaged in, or
intends to engage in, or has an arrangement or understanding with any person to
participate in, the distribution (within the meaning of the Securities Act of
1933, as amended (the "Securities Act")) of such New Notes and that neither the
holder of such Old Notes nor any such other person is an "affiliate," as defined
in Rule 405 under the Securities Act, of the Company.
The undersigned also acknowledges that this Exchange Offer is being made by
the Company in reliance on an interpretation by the staff of the Securities and
Exchange Commission (the "SEC"), as set forth in no-action letters issued to
third parties, that the New Notes issued in exchange for the Old Notes pursuant
to the Exchange Offer may be offered for resale, resold and otherwise
transferred by holders thereof (other than any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act), without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Notes are acquired in
the ordinary course of such holders' business and such holders have no
arrangement with any person to participate in the distribution (within the
meaning of the Securities Act) of such New Notes. If the undersigned is not a
broker-dealer, the undersigned represents that it is not engaged in, and does
not intend to engage in, and has no arrangement or understanding with any person
to participate in, a distribution (within the meaning of the Securities Act) of
New Notes. If the undersigned is a broker-dealer that will receive New Notes for
its own account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Notes; however, by so acknowledging and
by delivering a prospectus, the undersigned will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act. The undersigned
acknowledges that in reliance on an interpretation by the staff of the SEC, a
broker-dealer may fulfill his prospectus delivery requirements with respect to
the New Notes (other than a resale of an unsold allotment from the original sale
of the Old Notes) with the Prospectus which constitutes part of this Exchange
Offer.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
sale, assignment and transfer of the Old Notes tendered hereby. All authority
conferred or agreed to be conferred in this Letter and every obligation of the
undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives of
the undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. The tender may be withdrawn only in accordance
with the procedures set forth in "The Exchange Offer -- Withdrawal Rights"
section of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please deliver the New Notes (and, if applicable,
substitute certificates representing Old Notes for any Old Notes not exchanged)
in the name of the undersigned or, in the case of a book-entry delivery of Old
Notes, please credit the account indicated above maintained at the Book-Entry
Transfer Facility. Similarly, unless otherwise indicated under the box entitled
"Special Delivery Instructions" below, please send the New Notes (and, if
applicable, substitute certificates representing Old
4
<PAGE> 5
Notes for any Old Notes not exchanged) to the undersigned at the address shown
above in the box entitled "Description of Old Notes."
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD NOTES"
ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD NOTES AS
SET FORTH IN SUCH BOX ABOVE.
5
<PAGE> 6
------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Old Notes not exchanged
and/or New Notes are to be issued in the name of someone other than the
person or persons whose signature(s) appear(s) on the Letter below, or if
Old Notes delivered by book-entry transfer which are not accepted for
exchange are to be returned by credit to an account maintained at the
Book-Entry Transfer Facility other than the account indicated above.
Issue: New Notes and/or Old Notes to:
Name(s)
------------------------------------------------------------
(PLEASE TYPE OR PRINT)
------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Address
------------------------------------------------------------
------------------------------------------------------------
(ZIP CODE)
(COMPLETE SUBSTITUTE FORM W-9)
[ ] Credit unexchanged Old Notes delivered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below.
------------------------------------------------------------
(BOOK-ENTRY TRANSFER FACILITY
ACCOUNT NUMBER, IF APPLICABLE)
============================================================
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Old Notes not exchanged
and/or New Notes are to be sent to someone other than the person or
persons whose signature(s) appear(s) on this Letter below or to such
person or persons at an address other than shown in the box entitled
"Description of Old Notes" on this Letter above.
Mail: New Notes and/or Old Notes to:
Name(s)
------------------------------------------------------------
(PLEASE TYPE OR PRINT)
------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Address
------------------------------------------------------------
------------------------------------------------------------
(ZIP CODE)
------------------------------------------------------------
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF OR AN AGENT'S MESSAGE IN LIEU
THEREOF (TOGETHER WITH THE CERTIFICATES FOR OLD NOTES OR A BOOK-ENTRY
CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED
DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK
CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
6
<PAGE> 7
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9 ON REVERSE SIDE)
<TABLE>
<S> <C>
Dated:
x , 1998
---------------------- -------------------
x , 1998
---------------------- -------------------
SIGNATURE(S) OF OWNER DATE
</TABLE>
Area Code and Telephone Number
---------------------------------------------------------------------------
This Letter must be signed by the registered holder(s) as the name(s)
appear(s) on the certificate(s) for the Old Notes hereby tendered or on a
security position listing or by any person(s) authorized to become registered
holder(s) by endorsements and documents transmitted herewith. If signature is by
a trustee, executor, administrator, guardian, officer or other person acting in
a fiduciary or representative capacity, please set forth full title. See
Instruction 3.
Name(s):
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Capacity:
---------------------------------------------------------------------------
Address:
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(INCLUDING ZIP CODE)
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 3)
Signature(s) Guaranteed by
an Eligible Institution:
---------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
---------------------------------------------------------------------------
(TITLE)
---------------------------------------------------------------------------
(NAME AND FIRM)
Dated:
7
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
FOR ALL OUTSTANDING
9 1/2% SENIOR DISCOUNT NOTES DUE 2005
IN EXCHANGE FOR THE
9 1/2% SENIOR DISCOUNT NOTES DUE 2005
1. DELIVERY OF THIS LETTER AND NOTES; GUARANTEED DELIVERY PROCEDURES.
This Letter is to be completed by holders (which term, for purposes of the
Exchange Offer, includes any participant in the Book-Entry Transfer Facility
system whose name appears on a security position listing as the holder of such
Old Notes) either if certificates are to be forwarded herewith or if tenders are
to be made pursuant to the procedures for delivery by book-entry transfer set
forth in the Prospectus under "The Exchange Offer -- Book-Entry Transfers" and
an Agent's Message is not delivered. Tenders by book-entry transfer may also be
made by delivering an Agent's Message in lieu of this Letter. The term "Agent's
Message" means a message, transmitted by the Book-Entry Transfer Facility to and
received by the Exchange Agent and forming a part of a Book-Entry Confirmation,
which states that the Book-Entry Transfer Facility has received an express
acknowledgment from the tendering Participant, which acknowledgment states that
such Participant has received and agrees to be bound by, and makes the
representations and warranties contained in, this Letter and that the Company
may enforce this Letter against such Participant. Certificates for all
physically tendered Old Notes, or Book-Entry Confirmation, as the case may be,
as well as a properly completed and duly executed Letter (or facsimile hereof or
Agent's Message in lieu thereof) and any other documents required by this
Letter, must be received by the Exchange Agent at the address set forth herein
on or prior to the Expiration Date, or the tendering holder must comply with the
guaranteed delivery procedures set forth below. Old Notes tendered hereby must
be in denominations of principal amount at maturity of Euro 1,000 and any
integral multiple thereof.
Holders whose certificates for Old Notes are not immediately available or
who cannot deliver their certificates and all other required documents to the
Exchange Agent on or prior to the Expiration Date, or who cannot complete the
procedure for book-entry transfer on a timely basis, may tender their Old Notes
pursuant to the guaranteed delivery procedures set forth in the Prospectus under
"The Exchange Offer -- Guaranteed Delivery Procedures." Pursuant to such
procedures, (i) such tender must be made through an Eligible Institution, (ii)
prior to the Expiration Date, the Exchange Agent must receive from such Eligible
Institution a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by telegram, telex,
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Old Notes and the amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that within five New York
Stock Exchange ("NYSE") trading days after the date of execution of the Notice
of Guaranteed Delivery, the certificates for all physically tendered Old Notes,
or a Book-Entry Confirmation, together with a properly completed and duly
executed Letter (or facsimile thereof or Agent's Message in lieu thereof) with
any required signature guarantees and any other documents required by the Letter
will be deposited by the Eligible Institution with the Exchange Agent, and (iii)
the certificates for all physically tendered Old Notes, in the proper form for
transfer, or Book-Entry Confirmation, as the case may be, together with a
properly completed and duly executed Letter (or facsimile thereof or Agent's
Message in lieu thereof) with any required signature guarantees and all other
documents required by this Letter, are received by the Exchange Agent within
five NYSE trading days after the date of execution of the Notice of Guaranteed
Delivery.
The method of delivery of this Letter, the Old Notes and all other required
documents is at the election and risk of the tendering holders, but the delivery
will be deemed made only when actually received or confirmed by the Exchange
Agent. If Old Notes are sent by mail, it is suggested that the mailing be made
sufficiently in advance of the Expiration Date to permit delivery to the
Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration Date.
See the Prospectus under "The Exchange Offer."
2. PARTIAL TENDERS (NOT APPLICABLE TO HOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER).
If less than all of the Old Notes evidenced by a submitted certificate are
to be tendered, the tendering holder(s) should fill in the aggregate principal
amount of Old Notes to be tendered in the box above entitled "Description of
Notes." A reissued certificate representing the balance of nontendered Old Notes
will be sent to such tendering holder,
8
<PAGE> 9
unless otherwise provided in the appropriate box on this letter, promptly after
the Expiration Date. All of the Old Notes delivered to the Exchange Agent will
be deemed to have been tendered unless otherwise indicated.
3. SIGNATURES ON THIS LETTER; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF
SIGNATURES.
If this Letter is signed by the Holder of the Old Notes tendered hereby,
the signature must correspond exactly with the name as written on the face of
the certificates or on the Book-Entry Transfer Facility's security position
listing as the holder of such Old Notes without any change whatsoever.
If any tendered Old Notes are owned of record by two or more joint owners,
all of such owners must sign this Letter.
If any tendered Old Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter as there are different registrations of certificates.
When this Letter is signed by the registered holder or holders of the Old
Notes specified herein and tendered hereby, no endorsements of certificates or
separate bond powers are required. If, however, the New Notes are to be issued,
or any untendered Old Notes are to be reissued, to a person other than the
registered holder, then endorsements of any certificates transmitted hereby or
separate bond powers are required. Signatures on such certificate(s) or bond
powers must be guaranteed by a participant in a securities transfer association
recognized signature program.
If this Letter is signed by a person other than the registered holder or
holders of any certificate(s) specified herein, such certificate(s) must be
endorsed or accompanied by appropriate bond powers, in either case signed
exactly as the name or names of the registered holder or holders appear(s) on
the certificate(s) and signatures on such certificate(s) or bond powers must be
guaranteed by an Eligible Institution.
If this Letter or any certificates or bond powers are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.
Endorsements on certificates for Old Notes or signatures on bond powers
required by this Instruction 3 must be guaranteed by a firm which is a member of
a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
having an office or correspondent in the United States (an "Eligible
Institution").
Signatures on this Letter need not be guaranteed by an Eligible
Institution, provided the Old Notes are tendered: (i) by a registered holder of
Old Notes who has not completed the box entitled "Special Issuance Instructions"
or "Special Delivery Instructions" on this Letter or (ii) for the account of an
Eligible Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTION.
Tendering holders of Old Notes should indicate in the applicable box the
name and address to which New Notes issued pursuant to the Exchange Offer and/or
substitute certificates evidencing Old Notes not exchanged are to be issued or
sent, if different from the name or address of the person signing this Letter.
In the case of issuance in a different name, the employer identification or
social security number of the person named must also be indicated. Holders
tendering Old Notes by book-entry transfer may request that Old Notes not
exchanged be credited to such account maintained at the Book-Entry Transfer
Facility as such holder may designate hereon. If no such instructions are given,
such Old Notes not exchanged will be returned to the name or address of the
person signing this Letter.
5. TAX IDENTIFICATION NUMBER.
Federal income tax law generally requires that a tendering holder whose Old
Notes are accepted for exchange must provide the Company (as payor) with such
holder's correct Taxpayer Identification Number ("TIN") on Substitute Form W-9
below, which in the case of a tendering holder who is an individual, is his or
her social security number. If the Company is not provided with the current TIN
or an adequate basis for an exemption, such tendering holder may be subject to a
$50 penalty imposed by the Internal Revenue Service. In addition, delivery to
such tendering holder of New Notes may be subject to backup withholding in an
amount equal to 31% of all reportable payments made after the exchange. If
withholding results in an overpayment for taxes, a refund may be obtained.
9
<PAGE> 10
Exempt holders of Old Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed Guidelines of Certification of Taxpayer
Identification Number on Substitute Form W-9 (the "W-9 Guidelines") for
additional instructions.
To prevent backup withholding, each tendering holder of Old Notes must
provide its correct TIN by completing the "Substitute Form W-9" set forth below,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN) and that (i) the holder is exempt from backup withholding, (ii) the holder
has not been notified by the Internal Revenue Service that such holder is
subject to a backup withholding as a result of a failure to report all interest
or dividends or (iii) the Internal Revenue Service has notified the holder that
such holder is no longer subject to backup withholding. If the tendering holder
of Old Notes is a nonresident alien or foreign entity not subject to backup
withholding, such holder must give the Company a completed Form W-8, Certificate
of Foreign Status. These forms may be obtained from the Exchange Agent. If the
Old Notes are in more than one name or are not in the name of the actual owner,
such holder should consult the W-9 Guidelines for information on which the TIN
to report. If such holder does not have a TIN, such holder should consult the
W-9 Guidelines for instructions on applying for a TIN, check the box in Part 2
of the Substitute Form W-9 and write "applied for" in lieu of its TIN. Note:
Checking this box and writing "applied for" on the form means that such holder
has already applied for a TIN or that such holder intends to apply for one in
the near future. If such holder does not provide its TIN to the Company within
60 days, backup withholding will begin and continue until such holder furnishes
its TIN to the Company.
6. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the transfer
of Old Notes to it or its order pursuant to the Exchange Offer. If, however, New
Notes and/or substitute Old Notes not exchanged are to be delivered to, or are
to be registered or issued in the name of, any person other than the registered
holder of the Old Notes tendered hereby, or if tendered Old Notes are registered
in the name of any person other than the person signing this Letter, or if a
transfer tax is imposed for any reason other than the transfer of Old Notes to
the Company or its order pursuant to the Exchange Offer, the amount of any such
transfer taxes (whether imposed on the registered holder or any other person)
will be payable by the tendering holder. If satisfactory evidence of payment of
such taxes or exemption therefrom is not submitted herewith, the amount of such
transfer taxes will be billed directly to such tendering holder.
7. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive satisfaction of any or all
conditions enumerated in the Prospectus.
8. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Old Notes, by execution of this Letter or an
Agent's Message in lieu thereof, shall waive any right to receive notice of the
acceptance of their Old Notes for exchange.
Neither the Company, the Exchange Agent nor any other person is obligated
to give notice of any defect or irregularity with respect to any tender of Old
Notes nor shall any of them incur any liability for failure to give any such
notice.
9. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES.
Any holder whose Old Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the addresses indicated above for further
instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter, may be directed to the
Exchange Agent, at the addresses and telephone numbers indicated above.
10
<PAGE> 11
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
- --------------------------------------------------------------------------------
PAYOR'S NAME: CELLULAR COMMUNICATIONS INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE
FORM W-9 PROVIDE YOUR TIN
DEPARTMENT OF THE TREASURY IN THE BOX AT
INTERNAL REVENUE SERVICE RIGHT AND CERTIFY TIN:
BY SIGNING AND -----------------
DATING BELOW. (Social Security
Number or
Employer
Identification
Number)
---------------------------------------
PART 2 -- TIN Applied For [ ]
---------------------------------------
PAYOR'S REQUEST FOR TAXPAYER IDENTIFICATION
NUMBER ("TIN") AND CERTIFICATION
CERTIFICATION: UNDER THE PENALTIES OF PERJURY,
I CERTIFY THAT
(1) the number shown on this form is my correct
Taxpayer Identification Number (or I am waiting
for a number to be issued to me).
(2) I am not subject to backup withholding
either because: (a) I am exempt from backup
withholding, or (b) I have not been notified by
the Internal Revenue Service (the "IRS") that I
am subject to backup withholding as a result of
a failure to report all interest or dividends,
or (c) the IRS has notified me that I am no
longer subject to backup withholding, and
(3) any other information provided on this form
is true and correct.
SIGNATURE DATE
----------------------- ----------
- --------------------------------------------------------------------------------
You must cross out item (2) of the above certification if you have been notified
by the IRS that you are subject to backup withholding because of underreporting
of interest or dividends on your tax return and you have not been notified by
the IRS that you are no longer subject to backup withholding.
- --------------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 2 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administrative Office
or (b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a Taxpayer Identification Number by
the time of the exchange, 31 percent of all reportable payments made to me
thereafter will be withheld until I provide a number.
- ------------------------------------------------------- -------------------
SIGNATURE DATE
11
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY FOR
CELLULAR COMMUNICATIONS INTERNATIONAL, INC.
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of Cellular Communications International, Inc. (the "Company")
made pursuant to a prospectus dated May 13, 1998 (the "Prospectus"), if
certificates for Old Notes of the Company are not immediately available or if
the procedure for book-entry transfer cannot be completed on a timely basis or
time will not permit all required documents to reach the Company prior to 5:00
p.m., New York City time, on the Expiration Date of the Exchange Offer. Such
form may be delivered or transmitted by telegram, telex, facsimile transmission,
mail or hand delivery to The Chase Manhattan Bank (the "Exchange Agent") as set
forth below. Capitalized terms not defined herein are defined in the Prospectus.
The Exchange Agent is:
In New York
<TABLE>
<S> <C>
By Mail, By Hand and Overnight Courier: By Facsimile:
The Chase Manhattan Bank 011-44-171-777-5410
Trinity Tower
9 Thomas More Street Confirm by Telephone:
London E1 9YT
Manager, Corporate Trust Operations:
011-44-171-777-5414
In Luxembourg
By Mail, By Hand and Overnight Courier: By Facsimile:
Chase Manhattan Bank Luxembourg S.A. (352) 46 26 85380
5 Rue Plaetis
L-2338, Luxembourg Confirm by Telephone:
Manager, Corporate Trust Operations:
(352) 46 26 85284
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF THIS INSTRUMENT VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE,
WILL NOT CONSTITUTE A VALID DELIVERY.
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus, the undersigned
hereby tenders to the Company the principal amount of Old Notes set forth below,
pursuant to the guaranteed delivery procedure described in the Prospectus under
"The Exchange Offer -- Guaranteed Delivery Procedures."
<TABLE>
<S> <C>
Principal Amount at Maturity of Old Notes Tendered:* If Old Notes will be delivered by book-entry transfer to The
$ Depository Trust Company, provide account number.
------------------------------------------------------------ Account Number----------------------------------------
Certificates Nos. (if available):
- -----------------------------------------------------------
Total Principal Amount at Maturity Represented by Old Notes
Certificate(s):
Euro
--------------------------------------------------------
</TABLE>
* Must be in denominations of principal amount at maturity of Euro 1,000 and any
integral multiple thereof. See Instruction 1 in the Letter of Transmittal.
[ ] CHECK HERE IF SENIOR DISCOUNT NOTES ARE BEING TENDERED
<PAGE> 2
ALL AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE THE
DEATH OR INCAPACITY OF THE UNDERSIGNED AND EVERY OBLIGATION OF THE UNDERSIGNED
HEREUNDER SHALL BE BINDING UPON THE HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS
AND ASSIGNS OF THE UNDERSIGNED.
PLEASE SIGN HERE
x
------------------------------ --------------------------
x
------------------------------ --------------------------
Signature(s) of Owner(s) or Date
Authorized Signatory
Telephone Number (including area code):
-------------------------------------
This Notice of Guaranteed Delivery must be signed by the holder(s) of Old
Notes as their name(s) appear(s) on certificates for Old Notes or on a security
position listing, or by person(s) authorized to become registered holder(s) by
endorsement and documents transmitted with this Notice of Guaranteed Delivery.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must set forth his or her full title below.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
----------------------------------------------------------------------
----------------------------------------------------------------------
Capacity:
----------------------------------------------------------------------
Address(es):
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
GUARANTEE
The undersigned, a member of a registered national securities exchange, or
a member of the National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office or correspondent in the United
States, hereby guarantees that the certificates representing the principal
amount of Old Notes tendered hereby in proper form for transfer, or timely
confirmation of the book-entry transfer of such Old Notes into the Exchange
Agent's account at Euroclear System and Cedel Bank, societe anonyme pursuant to
the procedures set forth in the Prospectus under "The Exchange
Offer -- Guaranteed Delivery Procedures," together with one or more properly
completed and duly executed Letters of Transmittal (or facsimile thereof or
Agent's Message in lieu thereof) and any other documents required by the Letter
of Transmittal in respect of the Old Notes, will be received by the Exchange
Agent at the address set forth above, no later than five New York Stock Exchange
trading days after the date of execution hereof.
- ------------------------------------------------------ ------------------------
NAME OF FIRM AUTHORIZED SIGNATURE
- ------------------------------------------------------ ------------------------
ADDRESS TITLE
- ------------------------------------------------------ NAME:
------------------
ZIP CODE (PLEASE TYPE OR
PRINT)
AREA CODE AND TEL. NO. DATED:
-------------------------------- -----------------
NOTE: DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS FORM. CERTIFICATES FOR
OLD NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE> 1
CELLULAR COMMUNICATIONS INTERNATIONAL, INC.
OFFER FOR ALL OUTSTANDING
9 1/2% SENIOR DISCOUNT NOTES DUE 2005
IN EXCHANGE FOR
9 1/2% SENIOR DISCOUNT NOTES DUE 2005
To Our Clients:
Enclosed for your consideration is a prospectus dated May 13, 1998 (the
"Prospectus"), and the related letter of transmittal (the "Letter of
Transmittal"), relating to the offer (the "Exchange Offer") of Cellular
Communications International, Inc. (the "Company") to exchange an aggregate
principal amount of up to EURO 235,000,000 of its 9 1/2% Senior Discount Notes
Due 2005 (the "New Notes") for a like principal amount of its issued and
outstanding 9 1/2% Senior Discount Notes Due 2005 (the "Old Notes") upon the
terms and subject to the conditions described in the Prospectus. The Exchange
Offer is being made in order to satisfy certain obligations of the Company
contained in the registration rights agreements in respect of the Old Notes,
dated March 18, 1998, by and among the Company and the initial purchasers
referred to therein.
This material is being forwarded to you as the beneficial owner of the Old
Notes carried by us in your account but not registered in your name. A tender of
such Old Notes may only be made by us as the holder of record and pursuant to
your instructions.
Accordingly, we request instructions as to whether you wish us to tender on
your behalf the Old Notes held by us for your account, pursuant to the terms and
conditions set forth in the enclosed Prospectus and Letter of Transmittal.
Your instructions should be forwarded to us as promptly as possible in
order to permit us to tender the Old Notes on your behalf in accordance with the
provisions of the Exchange Offer. The Exchange Offer will expire at 5:00 p.m.,
New York City time, on June 12, 1998, unless extended by the Company (the
"Expiration Date"). Any Old Notes tendered pursuant to the Exchange Offer may be
withdrawn at any time before the Expiration Date.
Your attention is directed to the following:
1. The Exchange Offer is for any and all Old Notes.
2. The Exchange Offer is subject to certain conditions set forth in
the Prospectus in the section captioned "The Exchange Offer."
3. Any transfer taxes incident to the transfer of Old Notes from the
holder to the Company will be paid by the Company, except as otherwise
provided in the Instructions in the Letter of Transmittal.
4. The Exchange Offer expires at 5:00 p.m., New York City time, on
June 12, 1998, unless extended by the Company.
If you wish to have us tender your Old Notes, please so instruct us by
completing, executing and returning to us the instruction form on the back of
this letter. The Letter of Transmittal is furnished to you for information only
and may not be used directly by you to tender Old Notes.
INSTRUCTIONS WITH RESPECT TO THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer made by Cellular
Communications International, Inc. with respect to its Old Notes.
This will instruct you to tender the Old Notes held by you for the account
of the undersigned, upon and subject to the terms and conditions set forth in
the Prospectus and the related Letter of Transmittal.
<PAGE> 2
Please tender the Old Notes held by you for my account as indicated below:
<TABLE>
<CAPTION>
AGGREGATE PRINCIPAL AMOUNT AT MATURITY OF OLD NOTES TENDERED
------------------------------------------------------------
<S> <C>
9 1/2% Senior Discount Notes Due 2005 ------------------------------------------------------
[ ] Please do not tender any Old Notes held by ------------------------------------------------------
you for my account. SIGNATURE(S)
Dated: ------------------------------------------------------
- ---------------------------------------------, ------------------------------------------------------
1998 PLEASE PRINT NAME(S) HERE
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
ADDRESS(ES)
------------------------------------------------------
AREA CODE AND TELEPHONE NUMBER
------------------------------------------------------
TAX IDENTIFICATION OR SOCIAL SECURITY NO(S).
</TABLE>
None of the Old Notes held by us for your account will be tendered unless
we receive written instructions from you to do so. Unless a specific contrary
instruction is given in the space provided, your signature(s) hereon shall
constitute an instruction to us to tender all the Old Notes held by us for your
account.
<PAGE> 1
CELLULAR COMMUNICATIONS INTERNATIONAL, INC.
OFFER FOR ALL OUTSTANDING
9 1/2% SENIOR DISCOUNT NOTES DUE 2005
IN EXCHANGE FOR
9 1/2% SENIOR DISCOUNT NOTES DUE 2005
To: Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Cellular Communications International, Inc. (the "Company") is offering,
upon and subject to the terms and conditions set forth in a prospectus dated May
13, 1998 (the "Prospectus"), and the enclosed letter of transmittal (the "Letter
of Transmittal"), to exchange (the "Exchange Offer") an aggregate principal
amount of up to EURO 235,000,000 of its 9 1/2% Senior Discount Notes Due 2005
(the "New Notes") for a like principal amount of its issued and outstanding
9 1/2% Senior Discount Notes Due 2005 (the "Old Notes"). The Exchange Offer is
being made in order to satisfy certain obligations of the Company contained in
the registration rights agreements in respect of the Old Notes, dated March 18,
1998, by and among the Company and the initial purchasers referred to therein.
We are requesting that you contact your clients for whom you hold Old Notes
regarding the Exchange Offer. For your information and for forwarding to your
clients for whom you hold Old Notes registered in your name or in the name of
your nominee, or who hold Old Notes registered in their own names, we are
enclosing the following documents:
1. Prospectus dated May 13, 1998;
2. The Letter of Transmittal for your use and for the information (or
the use, where relevant) of your clients;
3. A Notice of Guaranteed Delivery to be used to accept the Exchange
Offer if certificates for Old Notes are not immediately available or time
will not permit all required documents to reach the Exchange Agent prior to
the Expiration Date (as defined below) or if the procedure for book-entry
transfer cannot be completed on a timely basis;
4. A form of letter which may be sent to your clients for whose
account you hold Old Notes registered in your name or the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Exchange Offer;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
6. Return envelopes addressed to The Chase Manhattan Bank, the
Exchange Agent for Old Notes.
YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00
P.M., NEW YORK CITY TIME, ON JUNE 12, 1998, UNLESS EXTENDED BY THE COMPANY (THE
"EXPIRATION DATE"). THE OLD NOTES TENDERED PURSUANT TO THE EXCHANGE OFFER MAY BE
WITHDRAWN AT ANY TIME BEFORE THE EXPIRATION DATE.
To participate in the Exchange Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof or Agent's Message in lieu
thereof), with any required signature guarantees and any other required
documents, should be sent to the Exchange Agent and certificates representing
the Old Notes should be delivered to the Exchange Agent, all in accordance with
the instructions set forth in the Letter of Transmittal and the Prospectus.
If holders of Old Notes wish to tender, but it is impracticable for them to
forward their certificates for Old Notes prior to the expiration of the Exchange
Offer or to comply with the book-entry transfer procedures on a timely basis, a
tender may be effected by following the guaranteed delivery procedures described
in the Prospectus under "The Exchange Offer -- Guaranteed Delivery Procedures."
<PAGE> 2
The Company will, upon request, reimburse brokers, dealers, commercial
banks and trust companies for reasonable and necessary costs and expenses
incurred by them in forwarding the Prospectus and the related documents to the
beneficial owners of Old Notes held by them as nominee or in a fiduciary
capacity. The Company will pay or cause to be paid all stock transfer taxes
applicable to the exchange of Old Notes pursuant to the Exchange Offer, except
as set forth in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Exchange Offer, or requests
for additional copies of the enclosed materials, should be directed to The Chase
Manhattan Bank, the Exchange Agent for the Old Notes, at its addresses and
telephone numbers set forth on the front of the Letter of Transmittal.
Very truly yours,
CELLULAR COMMUNICATIONS INTERNATIONAL,
INC.
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF
THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN
THE PROSPECTUS OR THE LETTER OF TRANSMITTAL.
Enclosures
