<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 15, 1998.
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
=================================================================================================================================
</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.
- ------------------------
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 APRIL 15, 1998
PROSPECTUS
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 , 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.
THE DATE OF THIS PROSPECTUS IS , 1998.
<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 , 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 April 7, 1998)....................... 1,828 1,756 1,794 1,817
</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 April 7, 1998)..................... 1.1060 1.0725 1.0862 1.0785
</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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<PAGE> 33
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 April 10, 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).............................. 1,016,419 5.92%
J. Barclay Knapp(4)................................. 421,762 2.51
Richard J. Lubasch(5)............................... 154,908 *
Gregg Gorelick(6)................................... 60,658 *
Stanton N. Williams(7).............................. 147,450 *
Del Mintz(8)........................................ 422,456 2.55
Sidney R. Knafel(9)................................. 310,933 1.88
Alan J. Patricof(10)................................ 72,177 *
Warren Potash(11)................................... 52,876 *
All directors and officers as a group (9 in
number)........................................... 2,659,639 14.82
Massachusetts Financial
Services Company(12).............................. 1,871,113 11.33
500 Boylston Street
Boston, MA 02116
HBK Investments L.P.(14)............................ 1,057,800 6.41
HBK Finance L.P.(14)
777 Main Street, Suite 2750
Fort Worth, TX 76102
President and Fellows of
Harvard College(15)................................. 905,325 5.48
600 Atlantic Avenue
Boston, MA 02210
T. Rowe Price Associates, Inc.(16).................. 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 80,311 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 80,311 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-D, dated March 2, 1998, filed by HBK
Investments L.P. and HBK Finance LP.
(14) Based solely upon a Form 13-G, dated February 12, 1998, filed by President
and Fellows of Harvard College.
(15) 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
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<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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"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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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 , 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 , 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 $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 meets 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 Exchange Agent
<TABLE>
<S> <C>
By Mail, By Hand and Overnight Courier: By Facsimile:
The Chase Manhattan Bank (212) 638-7380
Corporate Trust -- Securities Window
Room 234 -- North Building Confirm by Telephone:
55 Water Street
New York, NY 10041 Carlos Esteves: (212) 638-0454
</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
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
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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 , 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 have been accepted for clearance through the facilities of
Euroclear and Cedel Bank. The ISIN number for the Global Note is and
the Common Code is .
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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
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 , 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 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.**
</TABLE>
- ------------------------------
* filed herewith
** to be filed by amendment
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 APRIL 15, 1998.
POWER OF ATTORNEY
We, the undersigned officers and directors of Cellular Communications
International, Inc., hereby severally constitute and appoint William B.
Ginsberg, J. Barclay Knapp and Richard J. Lubasch, and each of them singly, our
true and lawful attorneys with full power to them, and each of them singly, to
sign for us and in our names in the capacities indicated below, the Registration
Statement on Form S-4 filed herewith and any and all pre-effective and
post-effective amendments to said Registration Statement, and generally to do
all such things in our names and on our behalf in our capacities as officers and
directors to enable Cellular Communications International, Inc. to comply with
the provisions of the Securities Act of 1933, and all requirements of the
Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by our said attorneys or any of them, to said
Registration Statement and any and all amendments hereto.
CELLULAR COMMUNICATIONS INTERNATIONAL,
INC.
By: /s/ WILLIAM B. 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, 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 B. GINSBERG Chairman of the Board, President and Chief April 15, 1998
- ------------------------------------------ Executive Officer (Principal Executive
William B. Ginsberg Officer)
/s/ STANTON N. WILLIAMS Vice President and Chief Financial Officer April 15, 1998
- ------------------------------------------ (Principal Financial Officer)
Stanton N. Williams
/s/ GREGG GORELICK Vice President -- Controller (Principal April 15, 1998
- ------------------------------------------ Accounting Officer)
Gregg Gorelick
/s/ J. BARCLAY KNAPP Executive Vice President, Chief Operating April 15, 1998
- ------------------------------------------ Officer and Director
J. Barclay Knapp
/s/ SIDNEY R. KNAFEL Director April 15, 1998
- ------------------------------------------
Sidney R. Knafel
</TABLE>
II-4
<PAGE> 102
<TABLE>
<CAPTION>
SIGNATURES CAPACITY DATE
<C> <S> <C>
/s/ DEL MINTZ Director April 15, 1998
- ------------------------------------------
Del Mintz
/s/ ALAN J. PATRICOF Director April 15, 1998
- ------------------------------------------
Alan J. Patricof
/s/ WARREN POTASH Director April 15, 1998
- ------------------------------------------
Warren Potash
</TABLE>
II-5
<PAGE> 103
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.**
</TABLE>
- ------------------------------
* filed herewith
** to be filed by amendment
<PAGE> 1
Exhibit 4.1
Execution Copy
--------------------------------
COMMUNICATIONS INTERNATIONAL, INC.
SERIES A AND SERIES B
9 1/2% SENIOR DISCOUNT NOTES DUE 2005
INDENTURE
--------------------------------
Dated as of March 18, 1998
THE CHASE MANHATTAN BANK
------------------------
Trustee
--------------
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE*
(a) Trust Indenture Act
Indenture Section
310 (a)(1)..............................................................7.10
(a)(2) .................................................................7.10
(a)(3)..................................................................N.A.
(a)(4)..................................................................N.A.
(a)(5)..................................................................7.10
(i)(b)..................................................................7.10
(ii)(c).................................................................N.A.
311(a)..................................................................7.11
(b) 7.11
(iii(c).................................................................N.A.
312 (a).................................................................2.05
(b) 11.03
(iv)(c).................................................................11.03
313(a)..................................................................7.06
(b)(1)..................................................................N.A.
(b)(2)..................................................................7.07
(v)(c)..................................................................7.06;
11.02
(vi)(d).................................................................7.06
314(a)..................................................................4.03;
11.02
(A)(b)..................................................................N.A.
(c)(1)..................................................................11.04
(c)(2)..................................................................11.04
(c)(3)..................................................................N.A.
(d).....................................................................N.A.
(vii)(e)................................................................11.05
(f).....................................................................NA
315 (a).................................................................7.01
(b) 7.05,
11.02
(A)(c)..................................................................7.01
(d) 7.01
(e) 6.11
316 (a)(last sentence)..................................................2.09
(a)(1)(A)...............................................................6.05
(a)(1)(B)...............................................................6.04
(a)(2)..................................................................N.A.
(b)6.07
<PAGE> 3
(B)(c)..................................................................2.12
317 (a)(1)..............................................................6.08
(a)(2)..................................................................6.09
(b) 2.04
318 (a).................................................................11.01
(b) N.A.
(c) 11.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
2
<PAGE> 4
TABLE OF CONTENTS
Page
----
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE........................1
Section 1.01. Definitions..................................................1
Section 1.02. Other Definitions...........................................18
Section 1.03. Trust Indenture Act Definitions.............................19
Section 1.04. Rules of Construction.......................................19
ARTICLE 2. THE NOTES........................................................20
Section 2.01. Form and Dating............................................20
Section 2.02. Execution and Authentication................................20
Section 2.03. Registrar and Paying Agent..................................21
Section 2.04. Paying Agent to Hold Money in Trust.........................21
Section 2.05. Holder Lists................................................22
Section 2.06. Transfer and Exchange.......................................22
Section 2.07. Replacement Notes...........................................33
Section 2.08. Outstanding Notes...........................................33
Section 2.09. Treasury Notes..............................................33
Section 2.10. Temporary Notes.............................................33
Section 2.11 Cancellation.................................................34
Section 2.12. Defaulted Interest..........................................34
Section 2.13. CUSIP and ISIN Numbers......................................34
ARTICLE 3. REDEMPTION AND PREPAYMENT........................................34
Section 3.01. Notices to Trustee..........................................34
i
<PAGE> 5
Section 3.02. Selection of Notes to Be Redeemed...........................35
Section 3.03. Notice of Redemption........................................35
Section 3.04. Effect of Notice of Redemption..............................36
Section 3.05. Deposit of Redemption Price.................................36
Section 3.06. Notes Redeemed in Part......................................36
Section 3.07. Optional Redemption.........................................36
Section 3.08. Mandatory Redemption........................................37
Section 3.09. Offer to Purchase by Application of Excess Proceeds.........37
ARTICLE 4. COVENANTS........................................................39
Section 4.01. Payment of Notes............................................39
Section 4.02. Maintenance of Office or Agency.............................41
Section 4.03. Reports.....................................................42
Section 4.04. Compliance Certificate......................................42
Section 4.05. Taxes.......................................................43
Section 4.06. Stay, Extension and Usury Laws..............................43
Section 4.07. Restricted Payments.........................................44
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries................................................45
Section 4.09. Incurrence of Indebtedness and Issuance of
Disqualified Stock .........................................46
Section 4.10. Asset Sales.................................................48
Section 4.11. Transactions with Affiliates................................49
Section 4.12. Liens.......................................................50
Section 4.13. Limitations on Line of Business.............................50
Section 4.14. Corporate Existence.........................................50
Section 4.15. Offer to Repurchase Upon Change of Control..................50
Section 4.16. Limitation on Status as Investment Company..................52
Section 4.17. Limitation on Sale and Leaseback Transactions...............52
ii
<PAGE> 6
Section 4.18. Payments for Consent........................................52
ARTICLE 5. SUCCESSORS.......................................................52
Section 5.01. Merger, Consolidation, or Sale of Assets....................52
Section 5.02. Successor Corporation Substituted...........................53
ARTICLE 6. DEFAULTS AND REMEDIES............................................53
Section 6.01. Events of Default...........................................53
Section 6.02. Acceleration................................................55
Section 6.03. Other Remedies..............................................55
Section 6.04. Waiver of Past Defaults.....................................55
Section 6.05. Control by Majority.........................................56
Section 6.06. Limitation on Suits.........................................56
Section 6.07. Rights of Holders of Notes to Receive Payment...............56
Section 6.08. Collection Suit by Trustee..................................57
Section 6.09. Trustee May File Proofs of Claim............................57
Section 6.10. Priorities..................................................57
Section 6.11. Undertaking for Costs.......................................58
Section 6.12. Trustee May Enforce Claims Without Possession of Notes......58
Section 6.13. Rights and Remedies Cumulative..............................58
ARTICLE 7. TRUSTEE..........................................................58
Section 7.01. Duties of Trustee...........................................58
Section 7.02. Rights of Trustee...........................................59
Section 7.03. Individual Rights of Trustee................................60
Section 7.04. Trustee's Disclaimer........................................60
Section 7.05. Notice of Defaults..........................................60
Section 7.06. Reports by Trustee to Holders of the Notes..................60
iii
<PAGE> 7
Section 7.07. Compensation and Indemnity..................................61
Section 7.08. Replacement of Trustee......................................61
Section 7.09. Successor Trustee by Merger, etc............................62
Section 7.10. Eligibility; Disqualification...............................62
Section 7.11. Preferential Collection of Claims Against Company...........63
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE.........................63
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance....63
Section 8.02. Legal Defeasance and Discharge..............................63
Section 8.03. Covenant Defeasance.........................................63
Section 8.04. Conditions to Legal or Covenant Defeasance..................64
Section 8.05. Deposited Money and Government Securities to be Held in
Trust; Other Miscellaneous Provisions.......................65
Section 8.06. Repayment to Company........................................66
Section 8.07. Reinstatement...............................................66
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER.................................66
Section 9.01. Without Consent of Holders of Notes.........................66
Section 9.02. With Consent of Holders of Notes............................67
Section 9.03. Compliance with Trust Indenture Act.........................68
Section 9.04. Revocation and Effect of Consents...........................68
Section 9.05. Notation on or Exchange of Notes............................68
Section 9.06. Trustee to Sign Amendments, etc.............................69
ARTICLE 10. MISCELLANEOUS...................................................69
Section 10.01. Trust Indenture Act Controls...............................69
Section 10.02. Notices....................................................69
Section 10.03. Communication by Holders of Notes with Other Holders of
Notes......................................................70
iv
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Section 10.04. Certificate and Opinion as to Conditions Precedent.........70
Section 10.05. Statements Required in Certificate or Opinion..............71
Section 10.06. Rules by Trustee and Agents................................71
Section 10.07. No Personal Liability of Directors, Officers, Employees and
Stockholders...............................................71
Section 10.08. Governing Law..............................................71
Section 10.09. No Adverse Interpretation of Other Agreements..............71
Section 10.10. Successors.................................................72
Section 10.11. Severability...............................................72
Section 10.12. Counterpart Originals......................................72
Section 10.13. Table of Contents, Headings, etc...........................72
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
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INDENTURE dated as of March 18, 1998 between Cellular Communications
International, Inc., a Delaware corporation (the "Company"), and The Chase
Manhattan Bank, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the 9 1/2% Series
A Senior Discount Notes due 2005 (the "Series A Notes") and the 9 1/2% Series B
Senior Discount Notes due 2005 (the "Series B Notes" and, together with the
Series A Notes, the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"144A Global Note" means a global note in the form of Exhibit A
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount at maturity of the Notes sold in reliance on Rule 144A.
"Accreted Value" means, as of any date of determination, the sum of
(a) the initial offering price to the public of each Note and (b) the portion of
the excess of the principal amount at maturity of each 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 Notes through the date of determination. The Accreted Value of any 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.
"Agent" means any Registrar, Paying Agent or co-registrar.
<PAGE> 10
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer or
exchange.
"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 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 Section 4.15 and 5.01 hereof 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 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).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Basket Investments" has the meaning specified in the definition of
Permitted Investments.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"Business Day" means each day which is not a legal holiday in any of
London, New York and Luxembourg.
"Capital Lease Obligation" 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
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<PAGE> 11
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.
"Cedel" means Cedel Bank, societe anonyme.
"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 Notes
have a 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 Notes are under publicly announced consideration for possible
downgrading by the applicable rating agency).
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<PAGE> 12
"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 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.
"Company" means Cellular Communications International, Inc., and any
and all successors thereto.
"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
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<PAGE> 13
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 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.
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<PAGE> 14
"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).
"Convertible Subordinated Note Indenture" means that certain
indenture, dated as of the date hereof, between the Company and The Chase
Manhattan Bank, as trustee, as amended or supplemented from time to tome,
relating to the Convertible Subordinated Notes.
"Convertible Subordinated Notes" means the Company's 6 % Convertible
Subordinated Notes due 2005 issued pursuant to the Convertible Subordinated Note
Indenture.
"CoreComm" means CoreComm Incorporated.
"Corporate Trust Office of the Trustee" shall be at the address of
the Trustee specified in Section 10.02 hereof or such other address as to which
the Trustee may give notice to the Company.
"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.
"Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"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.
"Definitive Note" means a certificated Note registered in the name
of the Holder thereof and issued in accordance with Section 2.06 hereof, in the
form of Exhibit A hereto except that such Note shall not bear the Global Note
Legend and shall not have the "Schedule of Exchanges of Interests in the Global
Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.03 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"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
6
<PAGE> 15
redeemable at the option of the Holder thereof, in whole or in part, on or prior
to the maturity date of the Notes.
"EC" means the European Communities.
"ECU" means the ECU referred to in Article 109g of the Treaty
establishing the EC, as amended by the Treaty on European Union 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).
"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.
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means the Notes issued in the Exchange Offer
pursuant to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration
Rights Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
"Existing Indebtedness" means Indebtedness of the Company and its
Restricted Subsidiaries in existence on the date hereof until such amounts are
repaid.
"Full Accretion Date" means April 1, 2003.
"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 this Indenture.
"Global Note" means the Restricted Global Note and the Unrestricted
Global Note, in the form of Exhibit A hereto issued in accordance with Section
2.01, 2.06(b)(iv), 2.06(d)(ii) or 2.06(f) hereof.
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<PAGE> 16
"Global Note Legend" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this 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.
"Holder" means a Person in whose name a Note is registered.
"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
8
<PAGE> 17
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 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.
"Indenture" means this Indenture, as amended or supplemented from
time to time.
"Indirect Participant" means a Person who holds a beneficial
interest in a Global Note through a Participant.
"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 hereof 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
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<PAGE> 18
(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
this Indenture.
"Letter of Transmittal" means the letter of transmittal to be
prepared by the Company and sent to all Holders of the Notes for use by such
Holders in connection with the Exchange Offer.
"License" means that certain GSM cellular telephone license awarded
to OPI by the Italian Government.
"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).
"Liquidated Damages" means all liquidated damages then owing
pursuant to Section 5 of the Registration Rights Agreement.
"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 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 and 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),
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<PAGE> 19
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 this 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.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"NTL" means NTL Incorporated, a Delaware corporation.
"Offering" means the offering of the Notes by the Company.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Sections 10.04 and 10.05 hereof.
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<PAGE> 20
"Omnitel" means Omnitel-Sistemi Radiocellulari Italiani S.p.A., and
any successors.
"OPI" means Omnitel Pronto Italia S.p.A., and any successors.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Sections
10.04 and 10.05 hereof. The counsel may be an employee of or counsel to the
Company or any Subsidiary of the Company.
"Outstanding Note Indenture" means that certain indenture, dated
August 22, 1995, by and between the Company and The Chase Manhattan Bank
(formerly known as Chemical Bank) relating to the Company's Senior Discount
Notes due 2000.
"Participant" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to The Depository Trust Company, shall include
Euroclear and Cedel).
"Participating Broker-Dealer" has the meaning set forth in the
Registration Rights Agreement.
"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.
"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
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<PAGE> 21
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
Equity Offering Proceeds received by the Company since the date hereof 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 hereof 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 hereof
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 this Indenture, or to the extent that
any Unrestricted Affiliate is properly designated as a Restricted Affiliate in
accordance with the terms of this Indenture, the lesser of (1) the initial
amount of all Investments made since the date hereof 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 hereof; (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 this 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 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 bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of
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<PAGE> 22
business; (e) Liens existing on the date hereof; (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 this 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 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, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereofor any other entity.
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"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 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
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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
hereof 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.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Registration Rights Agreement" means the Registration Rights
Agreement with respect to the Notes, dated as of March 18, 1998, by and among
the Company and the other parties named on the signature pages thereof, as such
agreement may be amended, modified or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the Securities
Act.
"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.
"Responsible Officer," when used with respect to the Trustee, means
any officer, including, without limitation, any vice-president, assistant
vice-president, assistant treasurer, assistant secretary, within the Corporate
Trust Administration of the Trustee (or any successor group of the Trustee) or
any other officer of the Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer or employee to
whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
"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 this Indenture that are applicable to Restricted
Affiliates. The Company will be required to deliver an Officers' Certificate to
the
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<PAGE> 24
Trustee, including a copy of the Board Resolution, upon designating any Minority
Owned Affiliate as a Restricted Affiliate.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Restricted Investment" means any Investment other than a Permitted
Investment.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" of any such Person means any Subsidiary of
such Person other than an Unrestricted Subsidiary of such Person.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"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.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Registration Rights Agreement
"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 Securities Act, as such Regulation is in effect on
the date of this Indenture.
"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 original issuance of at least
one year and that shall have been designated by the Company by a written notice
given to the Trustee.
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<PAGE> 25
"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 Notes and that does not provide for any
scheduled principal payment or redemption prior to the first anniversary of the
maturity of the 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.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as amended and as in effect on the date on which this Indenture is
qualified under the TIA.
"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 preceeding 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.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Affiliate" means any direct or indirect Minority Owned
Affiliate of the Company other than a Restricted Affiliate.
"Unrestricted Global Note" means a permanent global Note in the form
of Exhibit A attached hereto that bears the Global Note Legend and that has the
"Schedule of Exchanges of Interests in the Global Note" attached thereto, and
that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Definitive Note" means one or more Definitive Notes
that do not bear and are not required to bear the Private Placement Legend.
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"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 this 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).
"U.S. Person" means a U.S. person as defined in Rule 902(o) under
the Securities Act.
"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 payments 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.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
"Affiliate Transaction"..............................4.11
"Asset Sale Offer"...................................3.09
"Authentication Order"...............................2.02
"Bankruptcy Law".....................................4.01
"Change of Control Offer"............................4.15
"Change of Control Payment"..........................4.15
"Change of Control Payment Date" ....................4.15
"Chosen Currency" ...................................4.01
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"Components" ........................................4.01
"Covenant Defeasance"................................8.03
"Day of Valuation" ..................................4.01
"Event of Default"...................................6.01
"Excess Proceeds"....................................4.10
"incur"..............................................4.09
"Legal Defeasance" ..................................8.02
"Luxembourg Exchange" ...............................4.01
"Offer Amount".......................................3.09
"Offer Period".......................................3.09
"Paying Agent".......................................2.03
"Payment Default"....................................6.01
"Purchase Date"......................................3.09
"Registrar"..........................................2.03
"Restricted Payments"................................4.07
SECTION 1.03. TRUST INDENTURE ACT DEFINITIONS
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
and
"obligor" on the Notes means the Company and any successor obligor
upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
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(5) provisions apply to successive events and transactions;
and
(6) references to sections of or rules under the Securities
Act shall be deemed to include substitute, replacement of successor
sections or rules adopted by the SEC from time to time.
ARTICLE 2.
THE NOTES
SECTION 2.01. FORM AND DATING.
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of EURO 1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute,
and are hereby expressly made, a part of this Indenture and the Company and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. However, to the extent any
provision of any Note conflicts with the express provisions of this Indenture,
the provisions of this Indenture shall govern and be controlling.
(b) Global Notes.
Notes issued in global form shall be substantially in the form of
Exhibit A attached hereto (including the Global Note Legend thereon and the
"Schedule of Exchanges of Interests in the Global Note" attached thereto). Notes
issued in definitive form shall be substantially in the form of Exhibit A
attached hereto (but without the Global Note Legend thereon and without the
"Schedule of Exchanges of Interests in the Global Note" attached thereto). Each
Global Note shall represent such of the outstanding Notes as shall be specified
therein and each shall provide that it shall represent the aggregate principal
amount of outstanding Notes from time to time endorsed thereon and that the
aggregate principal amount of outstanding Notes represented thereby may from
time to time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Note to reflect the amount of any
increase or decrease in the aggregate principal amount of outstanding Notes
represented thereby shall be made by the Trustee or the Note Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder
thereof as required by Section 2.06 hereof.
(c) Euroclear and Cedel Procedures Applicable.
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be
applicable to transfers of beneficial interests in the Global Notes that are
held by Participants through Euroclear or Cedel Bank.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
One Officer shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal may be reproduced on the Notes and may
be in facsimile form.
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If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by one
Officer (an "Authentication Order"), authenticate Notes for original issue up to
the aggregate principal amount stated in paragraph 4 of the Notes. The aggregate
principal amount of Notes outstanding at any time may not exceed such amount
except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. An authenticating agent may authenticate Notes
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Chase Manhattan Bank (London), as
common depositary (the "Depositary") for both Morgan Guarantee Trust Company of
New York, Brussels office, as operator of the Euroclear System and Cedel Bank,
societe anonyme to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar
and Paying Agent at its offices in London and the City and State of New York
and, so long as the Notes are listed on the Luxembourg Stock Exchange, the
Company initially appoints Banque Internationale a Luxembourg to act as paying
agent in Luxembourg.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee
to agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and
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hold in a separate trust fund for the benefit of the Holders all money held by
it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating
to the Company, the Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA ss. 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes.
A Global Note may not be transferred as a whole except by the
Depositary to a nominee of the Depositary, by a nominee of the Depositary to the
Depositary or to another nominee of the Depositary, the Depositary or any such
nominee to a successor Depositary or a nominee of such successor Depositary. All
Global Notes will be exchanged by the Company for Definitive Notes if (i) the
Company delivers to the Trustee notice from the Depositary that it is unwilling
or unable to continue to act as Depositary or that it is no longer a clearing
agency registered under the Exchange Act and, in either case, a successor
Depositary is not appointed by the Company within 120 days after the date of
such notice from the Depositary or (ii) the Company in its sole discretion
determines that the Global Notes (in whole but not in part) should be exchanged
for Definitive Notes and delivers a written notice to such effect to the
Trustee. Upon the occurrence of either of the preceding events in (i) or (ii)
above, Definitive Notes shall be issued in such names as the Depositary shall
instruct the Trustee. Global Notes also may be exchanged or replaced, in whole
or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note
authenticated and delivered in exchange for, or in lieu of, a Global Note or any
portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof,
shall be authenticated and delivered in the form of, and shall be, a Global
Note. A Global Note may not be exchanged for another Note other than as provided
in this Section 2.06(a), however, beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.06(b),(c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global
Notes.
The transfer and exchange of beneficial interests in the Global
Notes shall be effected through the Depositary, in accordance with the
provisions of this Indenture and the Applicable Procedures. Beneficial interests
in the Restricted Global Notes shall be subject to restrictions on transfer
comparable to those set forth herein to the extent required by the Securities
Act. Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well as
one or more of the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend. Beneficial
interests in any Unrestricted Global Note may be
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transferred to Persons who take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note. No written orders or
instructions shall be required to be delivered to the Registrar to effect
the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of beneficial
interests that are not subject to Section 2.06(b)(i) above, the transferor
of such beneficial interest must deliver to the Registrar either (A) (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in
another Global Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the Participant
account to be credited with such increase or (B) (1) a written order from
a Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to
cause to be issued a Definitive Note in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given by the
Depositary to the Registrar containing information regarding the Person in
whose name such Definitive Note shall be registered to effect the transfer
or exchange referred to in (1) above. Upon consummation of an Exchange
Offer by the Company in accordance with Section 2.06(f) hereof, the
requirements of this Section 2.06(b)(ii) shall be deemed to have been
satisfied upon receipt by the Registrar of the instructions contained in
the Letter of Transmittal delivered by the Holder of such beneficial
interests in the Restricted Global Notes. Upon satisfaction of all of the
requirements for transfer or exchange of beneficial interests in Global
Notes contained in this Indenture and the Notes or otherwise applicable
under the Securities Act, the Trustee shall adjust the principal amount of
the relevant Global Note(s) pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and each of
the Trustee and the Registrar receives a certificate in the form of
Exhibit B hereto, including the certifications in item (1) or (2), as
applicable, thereof;
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in the Unrestricted Global Note. A
beneficial interest in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in an Unrestricted Global Note or
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of the beneficial interest to be transferred, in the
case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not (1)
a broker-dealer, (2) a Person participating in the distribution of
the Exchange Notes or (3) a Person who is an affiliate (as defined
in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
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(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance
with the Registration Rights Agreement; or
(D) each of the Trustee and the Registrar receives the
following:
(1) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a beneficial
interest in an Unrestricted Global Note, a certificate from such holder in
the form of Exhibit C hereto, including the certifications in item (1)(a)
thereof; or
(2) if the holder of such beneficial interest in a Restricted
Global Note proposes to transfer such beneficial interest to a Person who
shall take delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note, a certificate from such holder in the form of
Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Trustee
or the Registrar so requests or if the Applicable Procedures so require,
an Opinion of Counsel in form reasonably acceptable to the Trustee or the
Registrar, as the case may be, to the effect that such exchange or
transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a Restricted
Definitive Note or to transfer such beneficial interest to a Person who
takes delivery thereof in the form of a Restricted Definitive Note, then,
upon receipt by each of the Trustee and the Registrar of the following
documentation:
(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note, a certificate from such holder in the
form of Exhibit C hereto, including the certifications in item
(2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB
in accordance with Rule 144A under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
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(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule
903 or Rule 904 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications
in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant
to an exemption from the registration requirements of the Securities
Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(F) if such beneficial interest is being transferred pursuant
to an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest in a Restricted Global Note pursuant to this
Section 2.06(c) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Trustee shall
deliver such Definitive Notes to the Persons in whose names such Notes are
so registered. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.06(c)(i)
shall bear the Private Placement Legend and shall be subject to all
restrictions on transfer contained therein.
(ii) Beneficial Interests in Restricted Global Notes to Unrestricted
Definitive Notes. A holder of a beneficial interest in a Restricted Global
Note may exchange such beneficial interest for an Unrestricted Definitive
Note or may transfer such beneficial interest to a Person who takes delivery
thereof in the form of an Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the holder
of such beneficial interest, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the applicable Letter
of Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a Person
who is an affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
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(D) each of the Trustee and the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a Definitive
Note that does not bear the Private Placement Legend, a certificate from
such holder in the form of Exhibit C hereto, including the certifications
in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a Restricted
Global Note proposes to transfer such beneficial interest to a Person who
shall take delivery thereof in the form of a Definitive Note that does not
bear the Private Placement Legend, a certificate from such holder in the
form of Exhibit B hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Trustee and the
Registrar to the effect that such exchange or transfer is in compliance
with the Securities Act and that the restrictions on transfer contained
herein and in the Private Placement Legend are no longer required in order
to maintain compliance with the Securities Act.
(iii) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest in
an Unrestricted Global Note proposes to exchange such beneficial interest
for a Definitive Note or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Definitive Note, then, upon
satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest pursuant to this Section 2.06(c)(iii) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Notes to
the Persons in whose names such Notes are so registered. Any Definitive
Note issued in exchange for a beneficial interest pursuant to this Section
2.06(c)(iii) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in Restricted
Global Notes. If any Holder of a Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note or
to transfer such Restricted Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in a Restricted Global Note,
then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note,
a certificate from such Holder in the form of Exhibit C hereto, including
the certifications in item (2)(b) thereof;
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(B) if such Restricted Definitive Note is being transferred to a QIB
in accordance with Rule 144A under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications in
item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule 903 or
Rule 904 under the Securities Act, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred pursuant
to an exemption from the registration requirements of the Securities Act
in accordance with Rule 144 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in item
(3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item (3)(b) thereof;
or
(F) if such Restricted Definitive Note is being transferred pursuant
to an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause
to be increased the aggregate principal amount of, in the case of clause
(A) above, the appropriate Restricted Global Note and, in all other cases,
the 144A/Regulation S Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in Unrestricted
Global Notes. A Holder of a Restricted Definitive Note may exchange such Note
for a beneficial interest in an Unrestricted Global Note or transfer such
Restricted Definitive Note to a Person who takes delivery thereof in the form
of a beneficial interest in an Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the Holder,
in the case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Participating Broker-Dealer
pursuant to the Exchange Offer Registration Statement in accordance with
the Registration Rights Agreement; or
(D) each of the Trustee and the Registrar receives the following:
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(1) if the Holder of such Definitive Notes proposes to
exchange such Notes for a beneficial interest in the Unrestricted Global
Note, a certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof in the
form of a beneficial interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit B hereto, including
the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Trustee and the
Registrar to the effect that such exchange or transfer is in compliance
with the Securities Act and that the restrictions on transfer contained
herein and in the Private Placement Legend are no longer required in order
to maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Definitive Notes to a Person who takes delivery thereof in
the form of a beneficial interest in an Unrestricted Global Note at any time.
Upon receipt of a request for such an exchange or transfer, the Trustee shall
cancel the applicable Unrestricted Definitive Note and increase or cause to
be increased the aggregate principal amount of one of the Unrestricted Global
Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's
compliance with the provisions of this Section 2.06(e), the Registrar shall
register the transfer or exchange of Definitive Notes. Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Registrar the Definitive Notes duly endorsed or accompanied by
a written instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his attorney, duly authorized in writing. In
addition, the requesting Holder shall provide any additional certifications,
documents and information, as applicable, required pursuant to the following
provisions of this Section 2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any
Restricted Definitive Note may be transferred to and registered in the name
of Persons who take delivery thereof in the form of a Restricted Definitive
Note if each of the Trustee and the Registrar receives the following:
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(A) if the transfer will be made pursuant to Rule 144A under
the Securities Act, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the certifications in
item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule
904, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2) thereof;
and
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities Act,
then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any
Restricted Definitive Note may be exchanged by the Holder thereof for an
Unrestricted Definitive Note or transferred to a Person or Persons who take
delivery thereof in the form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in
the case of a transfer, certifies in the applicable Letter of
Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration Statement
in accordance with the Registration Rights Agreement; or
(D) each of the Trustee and the Registrar receives the
following:
(1) if the Holder of such Restricted Definitive Notes proposes
to exchange such Notes for an Unrestricted Definitive Note, a certificate
from such Holder in the form of Exhibit C hereto, including the
certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive Notes proposes
to transfer such Notes to a Person who shall take delivery thereof in the
form of an Unrestricted Definitive Note, a certificate from such Holder in
the form of Exhibit B hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably acceptable
to the Trustee, the Registrar and the Company to the effect that such
exchange or transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.
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<PAGE> 38
(iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A
Holder of Unrestricted Definitive Notes may transfer such Notes to a Person
who takes delivery thereof in the form of an Unrestricted Definitive Note.
Upon receipt of a request to register such a transfer, the Registrar shall
register the Unrestricted Definitive Notes pursuant to the instructions from
the Holder thereof.
(f) Exchange Offer.
Upon the occurrence of the Exchange Offer in accordance with the
Registration Rights Agreement, the Company shall issue and, upon receipt of an
Authentication Order in accordance with Section 2.02, the Trustee shall
authenticate (i) one or more Unrestricted Global Notes in an aggregate principal
amount equal to the principal amount of the beneficial interests in the
Restricted Global Notes tendered for acceptance by Persons that certify in the
applicable Letters of Transmittal that (x) they are not broker-dealers, (y) they
are not participating in a distribution of the Exchange Notes and (z) they are
not affiliates (as defined in Rule 144) of the Company, and accepted for
exchange in the Exchange Offer and (ii) Definitive Notes in an aggregate
principal amount equal to the principal amount of the Restricted Definitive
Notes accepted for exchange in the Exchange Offer. Concurrently with the
issuance of such Notes, the Trustee shall cause the aggregate principal amount
of the applicable Restricted Global Notes to be reduced accordingly, and the
Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.
(g) Legends.
The following legends shall appear on the face of all Global Notes
and Definitive Notes issued under this Indenture unless specifically stated
otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global Note and
each Definitive Note (and all Notes issued in exchange therefor or
substitution thereof) shall bear the legend in substantially the following
form:
"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
OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE THE UNITED STATES TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
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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, OR (d) 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."
(B) Notwithstanding the foregoing, any Global Note or Definitive
Note issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii), (d)(ii),
(d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and all Notes
issued in exchange therefor or substitution thereof) shall not bear the
Private Placement Legend.
(ii) Global Note Legend.. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON
AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS
GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION
2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE
TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND
(IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH
THE PRIOR WRITTEN CONSENT OF THE COMPANY."
(iii) Original Issue Discount Legend. Each Note shall bear a legend in
substantially the following form:
"FOR THE PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, THIS SECURITY IS BEING ISSUED WITH ORIGINAL
ISSUE DISCOUNT; FOR EACH EURO 1,000 PRINCIPAL AMOUNT OF THIS SECURITY, THE
ISSUE PRICE IS EURO 624.55, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS EURO
375.45, THE ISSUE DATE IS MARCH 18, 1998 AND THE YIELD TO MATURITY IS 9
1/2 % PER ANNUM."
(h) Cancellation and/or Adjustment of Global Notes.
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<PAGE> 40
At such time as all beneficial interests in a particular Global Note
have been exchanged for Definitive Notes or a particular Global Note has been
redeemed, repurchased or canceled in whole and not in part, each such Global
Note shall be returned to or retained and canceled by the Trustee in accordance
with Section 2.11 hereof. At any time prior to such cancellation, if any
beneficial interest in a Global Note is exchanged for or transferred to a Person
who will take delivery thereof in the form of a beneficial interest in another
Global Note or for Definitive Notes, the principal amount of Notes represented
by such Global Note shall be reduced accordingly and an endorsement shall be
made on such Global Note by the Trustee or by the Depositary; and if the
beneficial interest is being exchanged for or transferred to a Person who will
take delivery thereof in the form of a beneficial interest in another Global
Note, such other Global Note shall be increased accordingly and an endorsement
shall be made on such Global Note by the Trustee or by the Depositary.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company shall
execute and the Trustee shall authenticate Global Notes and Definitive Notes
upon the Company's order or, if the Trustee and the Registrar are not the
same Person, at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial interest
in a Global Note or to a Holder of a Definitive Note for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in
connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer pursuant to Sections
2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer of or
exchange any Note selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any registration of
transfer or exchange of Global Notes or Definitive Notes shall be the valid
obligations of the Company, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Global Notes or Definitive Notes
surrendered upon such registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange any Notes during a period beginning at the opening
of business 15 days before the day of any selection of Notes for redemption
under Section 3.02 hereof and ending at the close of business on the day of
selection, (B) to register the transfer of or to exchange any Note so
selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part or (c) to register the transfer of or to
exchange a Note between a record date and the next succeeding Interest
Payment Date.
(vi) Prior to due presentment for the registration of a transfer of any
Note, the Trustee, any Agent and the Company may deem and treat the Person in
whose name any Note is registered as the absolute owner of such Note for the
purpose of receiving payment of principal of and interest on such Notes and
for all other purposes, and none of the Trustee, any Agent or the Company
shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive Notes in
accordance with the provisions of Section 2.02 hereof.
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(viii) All certifications, certificates and Opinions of Counsel required
to be submitted to the Trustee and the Registrar pursuant to this Section
2.06 to effect a registration of transfer or exchange may be submitted by
facsimile.
SECTION 2.07. REPLACEMENT NOTES
If any mutilated 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 Note, the Company shall issue and the Trustee, upon receipt of
an Authentication Order, shall authenticate a replacement 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 Note is
replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company
and shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to
be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that the Trustee knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES
Until certificates representing Notes are ready for delivery, the
Company may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes
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shall be substantially in the form of certificated Notes but may have variations
that the Company considers appropriate for temporary Notes and as shall be
reasonably acceptable to the Trustee. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Notes in exchange
for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits
of this Indenture.
SECTION 2.11 CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it has
paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the Company) shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such interest to be paid.
SECTION 2.13. CUSIP AND ISIN NUMBERS.
The Company in issuing the Notes may use "CUSIP" and "ISIN," as
applicable, numbers (if then generally in use), and, if so, the Trustee shall
use "CUSIP" and "ISIN," as applicable, numbers in notices or redemption as a
convenience to the Holders; provided that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Notes or as contained in any notice of redemption and that reliance may
be placed only on the other identification numbers printed on the Notes, and any
such redemption shall not be affected by any defect in or omission of such
numbers. The Company will promptly notify the Trustee of any change in the
"CUSIP" or "ISIN," as applicable, numbers.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 45 days but not more than 60 days before a
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redemption date, an Officers' Certificate setting forth (i) the clause of this
Indenture pursuant to which the redemption shall occur, (ii) the redemption
date, (iii) the principal amount of Notes to be redeemed and (iv) the redemption
price.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED
If less than all of the Notes are to be redeemed or purchased in an
offer to purchase at any time, the Trustee shall select the Notes to be redeemed
or purchased among the Holders of the Notes in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, on a pro rata basis, by lot or in
accordance with any other method the Trustee considers fair and appropriate. In
the event of partial redemption by lot, the particular Notes to be redeemed
shall be selected, unless otherwise provided herein, not less than 30 nor more
than 60 days prior to the redemption date by the Trustee from the outstanding
Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the
Notes selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of EURO 1,000 or whole multiples of EURO
1,000; except that if all of the Notes of a Holder are to be redeemed, the
entire outstanding amount of Notes held by such Holder, even if not a multiple
of EURO 1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION
Subject to the provisions of Section 3.09 hereof, at least 30 days
but not more than 60 days before a redemption date, the Company shall mail or
cause to be mailed, by first class mail, a notice of redemption to each Holder
whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;
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(g) the paragraph of the Notes and/or Section of this Indenture pursuant
to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP or ISIN, as applicable, number, if any, listed in such notice or
printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE
One Business Day prior to the 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 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 Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a 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 Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case at the rate provided in the Notes
and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section 3.07, the
Company shall not have the option to redeem the Notes pursuant to this Section
3.07 prior to April 1, 2002. Thereafter, the Company shall have the option to
redeem the Notes, in whole or in part, at the redemption prices (expressed as
percentages of principal Accreted Value) set forth below plus, in the case of
any
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redemption subsequent to the Full Accretion Date, accrued and unpaid interest
and Liquidated Damages thereon, if any, to the applicable redemption date, if
redeemed during the twelve-month period beginning on April 1 of the years
indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002.............................................104.750 %
2003.............................................103.167 %
2004.............................................101.583 %
2005.............................................100.000 %
</TABLE>
(b) Any redemption pursuant to this Section 3.07 shall be made pursuant to
the provisions of Section 3.01 through 3.06 hereof.
(c) The Company shall have the right to purchase Notes in the open market
or otherwise. Any Notes so purchased may be resold at the Company's discretion
if not surrendered for cancellation pursuant to this Indenture.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth under Section 3.09, 4.10 and 4.15 hereof, the
Company shall not be required to make mandatory redemption payments with respect
to the Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Company
shall be required to commence an offer to all Holders to purchase Notes (an
"Asset Sale Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
five Business Days after the termination of the Offer Period (the "Purchase
Date"), the Company shall purchase the Accreted Value of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on
or before the related interest payment date, any accrued and unpaid interest ,
if any, shall be paid to the Person in whose name a Note is registered at the
close of business on such record date, and no additional interest shall be
payable to Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall
send, by first class mail, a notice to the Trustee and each of the Holders. The
notice shall contain all instructions and materials necessary to enable such
Holders to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer
shall be made to all Holders. The notice, which shall govern the terms of the
Asset Sale Offer, shall state:
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(a) that the Asset Sale Offer is being made pursuant to this Section 3.09
and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain
open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to
accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or
accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may only elect to have all of such Note purchased and may not elect
to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any Asset
Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the Depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate Accreted Value of Notes surrendered by Holders
exceeds the Offer Amount, the Company shall select the Notes to be purchased on
a pro rata basis (with such adjustments as may be deemed appropriate by the
Company so that only Notes in denominations of EURO 1,000, or integral multiples
thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the Company in accordance
with the terms of this Section 3.09. The Company, the Depositary or the Paying
Agent, as the case may be, shall promptly (but in any case not later than five
days after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of the Notes tendered by such Holder and accepted by
the Company for purchase, and the Company shall promptly issue a new Note, and
the Trustee, upon written request from the Company shall authenticate and mail
or deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or
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delivered by the Company to the Holder thereof. The Company shall publicly
announce the results of the Asset Sale Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof.
ARTICLE 4.
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal amount or
Accreted Value of, premium, if any, and interest on the Notes on the dates and
in the manner provided in the Notes. Principal amount or Directed Value,
premium, if any, and interest shall be considered paid on the date due if the
Paying Agent, if other than the Company or a Subsidiary thereof, holds as of
10:00 a.m. Eastern Time on the due date money deposited by the Company in
immediately available funds and designated for and sufficient to pay all
principal amount or Accreted Value, premium, if any, and interest then due. The
Company shall pay all Liquidated Damages, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement.
Interest will be computed on the basis of a 360 day year comprised
of twelve 30-day months. Principal, premium, if any, and interest and Liquidated
Damages, 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 Holder. Payments in a component currency of the EURO or ECU (if so
determined as provided below) will be made in the chosen currency (as defined
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 Notes will be issued in denominations of EURO 1,000
principal amount at maturity and integral multiples thereof.
References in the Notes and this 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 Company, 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 Notes and this Indenture shall be
amended accordingly. Notice of any such amendments shall be notified to the
Holders.
The Notes will be payable both as to principal and interest (on
presentation of such Notes if in certified 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 as long as the 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 Notes at their respective addresses set forth in the register
of holders of 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
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Trustee. Holders who receive payment in any currency other than the EURO must
make arrangements at their own expense.
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 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 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 Company shall, without
liability on its part and without having regard to the interests of individual
Holders of Notes, choose the Chosen Currency in which all payments with respect
to 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 Company and notified by it to the Luxembourg Exchange from one
or more leading banks selected by the Company, 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 Company 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 Company 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 Company from one or
more leading banks,
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as selected by the Company (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 cross rates if the Company 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 Company, 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 Company 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.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, for the payment of the principal of, premium, if any,
interest on or Liquidated Damages with respect to any Note and remaining
unclaimed for two years after such principal, premium, if any, interest or
Liquidated Damages has become due and payable shall, subject to applicable law,
be paid to the Company on its written request; and the Holder of such Note shall
thereafter look only to the Company for payment thereof, and all liability of
the Trustee or such Paying Agent with respect to such trust money shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in an authorized newspaper in each place of
payment or mail to each such Holder, or both, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such publication or mailing, any unclaimed balance of
such money then remaining will be repaid to the Company.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
Payments by the Company to the Paying Agent of principal and or
interest on the 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 Notes by
the EC or any member state thereof or any political subdivision or taxing
authority therein or thereof. Payments to the holders of the Notes will be
subject in all cases to any fiscal or other laws and regulations applicable
thereto.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of
New York and, so long as the Notes are listed on the Luxembourg Stock Exchange,
in Luxembourg, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at
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any time the Company shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York and, so long as the Notes are listed on the
Luxembourg Stock Exchange, in Luxembourg for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03 and, so long as the Notes are listed on the Luxembourg Stock Exchange, the
Company also hereby designates Banque Internationale a Luxembourg as another
such office or agency in accordance with Section 2.03 and the rules of the
Luxembourg Stock Exchange.
SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations of the SEC, so
long as any Notes are outstanding, the Company shall furnish to the Holders of
Notes (i) all quarterly and annual financial information that would be required
to be contained in a filing with the SEC 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 SEC 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 each case, within the
time periods specified in the SEC's rules and regulations. In addition,
following consummation of the Exchange Offer contemplated by the Registration
Rights Agreement, whether or not required by the rules and regulations of the
SEC, the Company shall file a copy of all such information and reports with the
SEC for public availability within the time periods specified in the SEC's rules
and regulations (unless the SEC will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. The Company shall at all times comply with TIA ss. 314(a).
(b) For so long as any Notes remain outstanding, the Company shall furnish
to the Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 90 days after the end
of each fiscal year, with such fiscal year as of the date hereof ending on
December 31, an Officers' Certificate stating that a review of the activities of
the Company and its Subsidiaries during the
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preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that to the best of
his or her knowledge the Company has kept, observed, performed and fulfilled
each and every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions of this
Indenture (or, if a Default or Event of Default shall have occurred, describing
all such Defaults or Events of Default of which he or she may have knowledge and
what action the Company is taking or proposes to take with respect thereto) and
that to the best of his or her knowledge no event has occurred and remains in
existence by reason of which payments on account of the principal of or
interest, if any, on the Notes is prohibited or if such event has occurred, a
description of the event and what action the Company is taking or proposes to
take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate proceedings
or where the failure to effect such payment is not adverse in any material
respect to the Holders of the Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so)
that it shall not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, that may affect the
covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law, and covenants that it shall not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the
Trustee, but shall suffer and permit the execution of every such power as though
no such law has been enacted.
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SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall 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 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 this 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 this 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 this 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 shall 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
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.
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair
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market value of any non-cash Restricted Payment shall be determined by the Board
of Directors whose resolution with respect thereto shall be delivered to the
Trustee, such determination to be based upon an opinion or appraisal issued by
an accounting, appraisal or investment banking firm of national standing if such
fair market value exceeds $1.0 million. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this Section 4.07 were
computed, together with a copy of any fairness opinion or appraisal required by
this Indenture.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall 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 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 this Indenture, (ii) this Indenture and the 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 this Indenture, (v) any Credit Facility permitted under Section 4.09 hereof;
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 (vi) 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
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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.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK.
The Company shall not, and shall 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 hereof 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 Notes;
(d) the Convertible Subordinated 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 this 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
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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 Section 4.07 hereof, Guarantees by
the Company or 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
hereof 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.
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 under
Section 4.07 hereof 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.
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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 Section 4.09 hereof 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
this Indenture to be incurred.
SECTION 4.10. ASSET SALES
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 Outstanding Notes Indenture, the Company will be required to
make an offer to all Holders of Notes (an "Asset Sale Offer") to purchase the
maximum principal amount of 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 plus Liquidated Damages thereon, if any, in
accordance with the procedures set forth in this Indenture. To the extent that
the aggregate Accreted Value of Notes tendered pursuant to an Asset Sale Offer
is less than the Excess Proceeds to be applied to purchase Notes, the Company
may use any remaining Excess Proceeds for any purpose permitted by the other
provisions of this Indenture. If the aggregate Accreted Value of Notes
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee, upon its receipt from the Company of notice and
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instruction, will select the Notes to be purchased on a pro rata basis with
appropriate adjustments so that only 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.
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 shall 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 shall
be treated as Net Proceeds only to the extent of the cash or Cash Equivalents
received.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall 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
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 this Indenture; (iii) any
agreements as in effect as of the issue date of the 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
of the Notes, in each case including any actions by
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the Company that are required to comply with such agreements; (v) Restricted
Payments permitted by this Indenture; (vi) any Permitted Investment; (vii)
transactions permitted by, and complying with, the provisions of Section 5.01
hereof; (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.
SECTION 4.12. LIENS.
The Company shall not, and shall 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 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.
SECTION 4.13. LIMITATIONS ON LINE OF BUSINESS.
The Company shall not, and shall 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.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect (i) its
corporate existence, and the corporate, partnership or other existence of each
of its Subsidiaries, in accordance with the respective organizational documents
(as the same may be amended from time to time) of the Company or any such
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; provided, however, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders of the Notes.
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, the Company shall make an
offer (a "Change of Control Offer") to each Holder to repurchase all or any part
(equal to EURO 1,000 in principal amount at maturity or an integral multiple
thereof) of each Holder's Notes at an offer price in cash equal to 101% of the
Accreted Value thereon as of the date of purchase, plus Liquidated Damages, if
any, on the date of purchase (if prior to April 1, 2003) or 101% of the
aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the date of purchase (if on or after
April 1, 2003) (in either case, the "Change of
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Control Payment"). Within 10 days following any Change of Control, the Company
shall mail a notice to each Holder stating: (1) that the Change of Control Offer
is being made pursuant to this Section 4.15 and that all Notes tendered will be
accepted for payment; (2) the purchase price and the purchase date, which shall
be no later than 30 business days from the date such notice is mailed (the
"Change of Control Payment Date"); (3) that any Note not tendered will continue
to accrete or accrue, as applicable, interest; (4) that, unless the Company
defaults in the payment of the Change of Control Payment, all Notes accepted for
payment pursuant to the Change of Control Offer shall cease to accrete or
accrue, as applicable, interest after the Change of Control Payment Date; (5)
that Holders electing to have any Notes purchased pursuant to a Change of
Control Offer will be required to surrender the Notes, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes completed, to
the Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the second Business Day
preceding the Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of Notes delivered for purchase, and a statement that such Holder is
withdrawing his election to have the Notes purchased; and (7) that Holders whose
Notes are being purchased only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the Notes surrendered, which
unpurchased portion must be equal to EURO 1,000 in principal amount or an
integral multiple thereof. The Company shall 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 in connection
with the repurchase of Notes in connection with a Change of Control.
(b) On the Change of Control Payment Date, the Company shall, to the
extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount at maturity of Notes or portions thereof being
purchased by the Company. The Paying Agent shall promptly mail to each Holder of
Notes so tendered payment in an amount equal to the purchase price for the
Notes, and the Trustee shall promptly authenticate and mail (or cause to be
transferred by book entry) to each Holder a new Note equal in principal amount
at maturity to any unpurchased portion of the Notes surrendered by such Holder,
if any; provided, that each such new Note shall be in a principal amount of EURO
1,000 or an integral multiple thereof. The Company shall publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
(c) Notwithstanding anything to the contrary in this Section 4.15, the
Company shall not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set forth in this
Section 4.15 and Section 3.09 hereof and purchases all Notes validly tendered
and not withdrawn under such Change of Control Offer.
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SECTION 4.16. LIMITATION ON STATUS AS INVESTMENT COMPANY.
The Company shall not, and shall 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.
SECTION 4.17. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall 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 Section 4.09 hereof and (B) create a Lien on such property securing
such Attributable Debt pursuant to Section 4.12 hereof 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, Section 4.10 hereof.
SECTION 4.18. PAYMENTS FOR CONSENT.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or is
paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 5.
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall 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, this Indenture, and the 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
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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 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 Section 4.09 hereof.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all of
the Company's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Company fails to pay interest on, or Liquidated Damages with
respect to, the Notes when the same becomes due and payable and such default
continues for a period of 30 days;
(b) the Company defaults in the payment when due of principal, Accreted
Value or Liquidated Damages, if any, of the Notes when the same becomes due and
payable at maturity, upon acceleration, repurchase or otherwise;
(c) the Company or any Restricted Subsidiary of the Company, Restricted
Affiliate or Restricted Subsidiary of a Restricted Affiliate fails to comply for
30 days after notice with any of its obligations under any of the provisions of
Section 4.07, 4.09, 4.10 or 4.15 hereof;
(d) the Company or any Restricted Subsidiary of the Company, Restricted
Affiliate or Restricted Subsidiary of Restricted Affiliate fails to observe or
perform any other covenant, representation, warranty or other agreement in this
Indenture or the Notes for 60 days after notice to the Company by the Trustee or
the Holders of at least 25% in aggregate principal amount of the Notes then
outstanding voting as a single class;
(e) a default occurs 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
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borrowed by the Company or any of its Restricted Subsidiaries or Restricted
Affiliates or Restricted Subsidiary of Restricted Affiliate or Omnitel or OPI,
whether such Indebtedness or Guarantee now exists, or is created after the date
of this 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 such Indebtedness, together with the
principal amount of any other such Indebtedness 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);
(f) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any of its Restricted Subsidiaries or Restricted Affiliates or Restricted
Subsidiary of Restricted Affiliate or Omnitel or OPI and such judgment or
judgments remain undischarged for a period (during which execution shall not be
effectively stayed) of 60 days, provided that the aggregate of all such
undischarged judgments exceeds $5 million (or, in the case of Omnitel or OPI,
$25 million or more);
(g) there is a 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;
(h) the Company or any of its Restricted Subsidiaries, Restricted
Affiliates or Restricted Subsidiaries of Restricted Affiliates or Omnitel or OPI
pursuant to or within the meaning of Bankruptcy Law or other similar laws:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors, or
(v) generally is not paying its debts as they become due; or
(i) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law or other similar laws that:
(i) is for relief against the Company or any of its Restricted
Subsidiaries, Restricted Affiliates or Restricted Subsidiaries of Restricted
Affiliates or Omnitel or OPI in an involuntary case;
(ii) appoints a custodian of the Company or any of its Restricted
Subsidiaries, Restricted Affiliates or Restricted Subsidiaries of Restricted
Affiliates or Omnitel or OPI or for all or substantially all of the property
of the Company or any of its Restricted Subsidiaries, Restricted Affiliates
or Restricted Subsidiaries of Restricted Affiliates or Omnitel or OPI; or
(iii) orders the liquidation of the Company or any of its Restricted
Subsidiaries, Restricted Affiliates or Restricted Subsidiaries of Restricted
Affiliates or Omnitel or OPI;
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and the order or decree remains unstayed and in effect for 60 consecutive
days.
SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default specified in
clause (h) or (i) of Section 6.01 hereof with respect to the Company, any
Restricted Subsidiaries, Restricted Affiliates or Restricted Subsidiaries of
Restricted Affiliates or Omnitel or OPI) occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the then outstanding Notes
may declare all the Notes to be due and payable immediately. Upon any such
declaration, the Notes shall become due and payable immediately. Notwithstanding
the foregoing, if an Event of Default specified in clause (h) or (i) of Section
6.01 hereof occurs with respect to the Company, any of its Restricted
Subsidiaries, Restricted Affiliates or Restricted Subsidiaries of Restricted
Affiliates or Omnitel or OPI, all outstanding Notes shall be due and payable
immediately without further action or notice. The Holders of a majority in
principal amount of the Notes then outstanding may, by notice to the Trustee, on
behalf of the Holders of all of the Notes outstanding, waive any existing
Default or Event of Default and its consequences under this Indenture except a
Default or Event of Default relating to the payment of principal or premium on
the Notes (which would be required to be unanimous).
If an Event of Default occurs on or after April 1, 2002 by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium that the Company
would have had to pay if the Company then had elected to redeem the Notes
pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, anything in this Indenture or in the Notes to the
contrary notwithstanding. If an Event of Default occurs prior to April 1, 2002
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 Notes prior to such date, then, upon acceleration of the
Notes, an additional premium shall also become and be immediately due and
payable in an amount that would otherwise have been due and payable pursuant to
Section 3.07 hereof had the Notes been redeemed on the year after April 1, 2002.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal amount or
Accreted Value of premium, if any, and interest on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount at
maturity of the then outstanding Notes by notice to the Trustee may on behalf of
the Holders of all of the Notes waive an existing Default or Event of Default
and its consequences hereunder, except a continuing Default or Event of Default
in the payment of the principal amount or Accreted Value of, premium and
Liquidated Damages,
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if any, or interest on, the Notes (including in connection with an offer to
purchase) (provided, however, that the Holders of a majority in aggregate
principal amount of the then outstanding Notes may rescind an acceleration and
its consequences, including any related payment default that resulted from such
acceleration). Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the
rights of another Holder of a Note or to obtain a preference or priority over
another Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal amount or Accreted Value of
premium and Liquidated Damages, if any, and interest on the Note, on or after
the respective due dates expressed in the Note (including in connection with an
offer to purchase), or to bring suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or affected without the
consent of such Holder.
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SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs
and is continuing, the Trustee is authorized to recover judgment in its own name
and as trustee of an express trust against the Company for the whole amount of
principal amount or Accreted Value of, premium and Liquidated Damages, if any,
and interest remaining unpaid on the Notes and interest on overdue principal
and, to the extent lawful, interest and such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any and
interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
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The Trustee may fix a record date and payment date for any payment
to Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
SECTION 6.12. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES.
All rights of action and claims under this Indenture or the Notes
may be prosecuted and enforced by the Trustee without the possession of any of
the Notes or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust in favor of the Holders, and any recovery of
judgment shall, after provision for the payment of compensation to, and
expenses, fees, disbursements and advances of, the Trustee, its agents and
counsel, be for the ratable benefit of the Holders of the Notes in respect of
which such judgment has been recovered.
SECTION 6.13. RIGHTS AND REMEDIES CUMULATIVE
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes in Section 2.07, no right
or remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
ARTICLE 7.
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the express
provisions of this Indenture and the Trustee need perform only those duties
that are specifically set forth in this Indenture and no others, and no
implied covenants or obligations shall be read into this Indenture against
the Trustee; and
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(ii) in the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture. However, the Trustee shall
examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it takes
or omits to take in good faith in accordance with a direction received by it
pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by it to
be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
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(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to Holders of Notes a notice of
the Default or Event of Default within 90 days after it occurs. Except in the
case of a Default or Event of Default in payment of principal of, premium, if
any, or interest on any Note, the Trustee may withhold the notice if and so long
as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA ss. 313(a) (but if no event described in
TIA ss. 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA ss.
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA ss. 313(d). The
Company shall promptly notify the Trustee when the Notes are listed on any stock
exchange.
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SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder.
The obligations of the Company under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture. Any lien in favor of a
predecessor Trustee shall be senior to any lien in favor of the current Trustee.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.01(h) or (i) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to
the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
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(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who
has been a Holder of a Note for at least six months, fails to comply with
Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has a combined capital and surplus of at
least $50 million as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA
ss. 310(b).
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SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced
by a resolution set forth in an Officers' Certificate, at any time, elect to
have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article 8.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 7.07 shall survive.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in Section
8.04 hereof, and as more fully set forth in such Section, payments in respect of
the principal of, premium, if any, and interest on such Notes when such payments
are due, (b) the Company's obligations with respect to such Notes under Article
2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities
of the Trustee hereunder and the Company's obligations in connection therewith
and (d) this Article 8. Subject to compliance with this Article 8, the Company
may exercise its option under this Section 8.02 notwithstanding the prior
exercise of its option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.13, 4.15, 4.17 and 4.18 hereof with respect to the outstanding
Notes on and after the date the conditions set forth in Section 8.04 are
satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter
be deemed not "outstanding" for the purposes of any direction, waiver, consent
or declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with
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respect to the outstanding Notes, the Company may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth in
any such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default under
Section 6.01 hereof, but, except as specified above, the remainder of this
Indenture and such Notes shall be unaffected thereby. In addition, upon the
Company's exercise under Section 8.01 hereof of the option applicable to this
Section 8.03 hereof, subject to the satisfaction of the conditions set forth in
Section 8.04 hereof, Sections 6.01(d) through 6.01(f) hereof shall not
constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders, cash in United States dollars, British pounds,
Italian Lira or German marks, the ECU, the EURO, non-callable Government
Securities, 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, premium and Liquidated Damages, if any, and interest on
the outstanding Notes on the stated date for payment thereof or on the
applicable redemption date, as the case may be;
(b) in the case of an election under Section 8.02 hereof, 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 this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal 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;
(c) in the case of an election under Section 8.03 hereof, 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 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;
(d) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit (other than a Default or Event of Default resulting
from the incurrence of Indebtedness all or a portion of the proceeds of which
will be used to defease the Notes pursuant to this Article 8 concurrently with
such incurrence) or insofar as Sections 6.01(h) or 6.01(i) hereof is concerned,
at any time in the period ending on the 91st day after the date of deposit;
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(e) 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 this 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;
(f) the Company shall have delivered to the Trustee an Opinion of Counsel
(which may be subject to customary exceptions) to the effect that on 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;
(g) 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 over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company;
(h) 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
(i) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all
sums due and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
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SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium, if
any, or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as a
secured creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars, British pounds, Italian lira or German marks, the ECU, the EURO or
non-callable Government Securities in accordance with Section 8.02 or 8.03
hereof, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture or the Notes without the consent
of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency provided such
provisions shall not adversely affect the interests of the Holders;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter the provisions of Article 2 hereof (including the
related definitions) in a manner that does not materially adversely affect any
Holder;
(c) to provide for the assumption of the Company's obligations to the
Holders of the Notes by a successor to the Company pursuant to Article 5 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder of the Note; or
66
<PAGE> 75
(e) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company in the execution of any
amended or supplemental Indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture (including Section 3.09, 4.10 and
4.15 hereof) and the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the Notes then
outstanding voting as a single class (including consents obtained in connection
with a tender offer or exchange offer for, or purchase of, the Notes), and,
subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of
Default (other than a Default or Event of Default in the payment of the
principal of, premium, if any, or interest on the Notes, except a payment
default resulting from an acceleration that has been rescinded) or compliance
with any provision of this Indenture or the Notes may be waived with the consent
of the Holders of a majority in principal amount of the then outstanding Notes
voting as a single class (including consents obtained in connection with a
tender offer or exchange offer for, or purchase of, the Notes). Section 2.08
hereof shall determine which Notes are considered to be "outstanding" for
purposes of this Section 9.02.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by
the Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding voting as a
single class may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Notes. However, without the consent of
each Holder
67
<PAGE> 76
affected, an amendment or waiver under this Section 9.02 may not (with respect
to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter or waive any of the provisions with respect to the redemption of the Notes
except as provided above with respect to Sections 3.09, 4.10 and 4.15 hereof;
(c) reduce the rate of accretion or change the time for payment of
interest, including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Notes (except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate principal amount
of the then outstanding Notes and a waiver of the payment default that resulted
from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of, or premium or interest, on the Notes; or
(g) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall
be set forth in a amended or supplemental Indenture that complies with the TIA
as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Holder of a Note or subsequent Holder
of a Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
68
<PAGE> 77
Failure to make the appropriate notation or issue a new Note shall
not affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article Nine if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental Indenture until the Board
of Directors approves it. In executing any amended or supplemental Indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01 hereof)
shall be fully protected in relying upon, in addition to the documents required
by Sections 10.04 and 10.05 hereof, an Officers' Certificate and an Opinion of
Counsel stating that (i) the execution of such amended or supplemental Indenture
is authorized or permitted by this Indenture, (ii) such amended or supplemental
Indenture complies with this Indenture and (iii) in the event such amended or
supplemental Indenture is being executed pursuant to Section 5.01 hereof, the
surviving Person assumes the obligations under this Indenture and the Notes.
ARTICLE 10.
MISCELLANEOUS
SECTION 10.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by a provision of the TIA, the imposed duties shall
control.
SECTION 10.02. NOTICES.
Any notice or communication by the Company or the Trustee to the
others is duly given if in writing and delivered in Person or mailed by first
class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address
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 H. Kennedy, Esq.
If to the Trustee:
69
<PAGE> 78
The Chase Manhattan
450 West 33rd Street
New York, NY 10001-2697
Telecopier No.: (212) 946-8159
Attention: Corporate Trust Administration
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
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 answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by overnight
air courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA ss. 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 10.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA ss. 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and anyone else shall have the protection of
TIA ss. 312(c).
SECTION 10.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 10.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 10.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
70
<PAGE> 79
SECTION 10.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA
ss. 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
SECTION 10.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 10.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No past, present or future director, officer, employee, incorporator
or stockholder of the Company shall have any liability for any obligations of
the Company under the Notes, this Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Notes.
SECTION 10.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED
TO CONSTRUE THIS INDENTURE AND THE NOTES WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 10.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture,
loan or debt agreement of the Company or its Subsidiaries or of any other
Person. Any such indenture, loan or debt agreement may not be used to interpret
this Indenture.
71
<PAGE> 80
SECTION 10.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
SECTION 10.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 10.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 10.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
72
<PAGE> 81
SIGNATURES
Dated as of March 18, 1998
CELLULAR COMMUNICATIONS
INTERNATIONAL, INC.
BY:
-----------------------
Name:
Title:
THE CHASE MANHATTAN BANK
BY:
-----------------------
Name:
Title:
73
<PAGE> 82
SIGNATURES
CELLULAR COMMUNICATIONS INTERNATIONAL, INC.
BY: /s/ Richard J. Lubasch
-----------------------
RICHARD J. LUBASCH
SENIOR VICE PRESIDENT
THE CHASE MANHATTAN BANK
BY: /s/ Andrew M. Deck
-----------------------
ANDREW M. DECK
VICE PRESIDENT
<PAGE> 83
EXHIBIT A
(Face of Note)
================================================================================
FOR THE PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, THIS SECURITY IS BEING ISSUED WITH ORIGINAL
ISSUE DISCOUNT; FOR EACH EURO 1,000 PRINCIPAL AMOUNT OF THIS SECURITY, THE
ISSUE PRICE IS EURO 624.55, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS EURO
375.45, THE ISSUE DATE IS MARCH 18, 1998 AND THE YIELD TO MATURITY IS
9 1/2% PER ANNUM.
(a) CUSIP/CINS/ISIN
9-1/2% [Series A] [Series B] Senior Discount Notes due 2005
No._____ EURO______
CELLULAR COMMUNICATIONS INTERNATIONAL, INC.
promises to pay to____________________________________________
or registered assigns,
the principal sum of_________________________________________
EURO on April 1, 2005
Interest Payment Dates: April 1 and October 1
Record Dates: March 15 and September 15
DATED: ______, 1998
CELLULAR COMMUNICATIONS INTERNATIONAL,
INC.
BY:
------------------------
Name:
Title:
This is one of the Global
Notes referred to in the
within-mentioned Indenture:
THE CHASE MANHATTAN BANK
as Trustee
By:
----------------------
A-1
<PAGE> 84
================================================================================
(Back of Note)
9-1/2% [Series A] [Series B] Senior Discount Notes due 2005
[Insert the Global Note Legend, if applicable pursuant to the
provisions of the Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the
provisions of the Indenture]
Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Cellular Communications International, Inc., a Delaware
corporation (the "Company"), promises to pay interest on the principal amount of
this Note at 9-1/2% per annum and shall pay the Liquidated Damages payable
pursuant to Section 5 of the Registration Rights Agreement referred to below.
Interest will not accrue prior to April 1, 2003. Thereafter, the Company will
pay interest and Liquidated Damages semi-annually on April 1 and October 1 (each
an "Interest Payment Date"), commencing on October 1, 2003, or if any such day
is not a Business Day, on the next succeeding Business Day . Interest on the
Notes will accrue from the most recent date to which interest has been paid or,
if no interest has been paid, from the date of issuance; provided that if there
is no existing Default in the payment of interest, and if this Note is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further, that the first Interest
Payment Date shall be October 1, 2003. The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at a rate that is 1%
per annum in excess of the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Notes at the close of business on the March 15 or
September 15 next preceding the Interest Payment Date, even if such Notes are
canceled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium and Liquidated
Damages, if any, and interest 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 Holder.
Payments in a component currency of the EURO or ECU (if so determined as
provided below) will be made in the chosen currency (as defined 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
Notes will be issued in denominations of EURO 1,000 principal amount at maturity
and integral multiples thereof.
References herein and in the Indenture to any business day, day-count
fraction or other convention (whether for the calculation of interest,
determination of payment dates or otherwise) will, if different, with effect
A-2
<PAGE> 85
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 Company, in its discretion, will determine to be
applicable for such EURO-denominated obligations held in international clearing
systems and the terms and conditions of the Notes and the Indenture will be
amended accordingly. Notice of any such amendments will be notified to the
Holders.
The Notes will be payable both as to principal and interest (on
presentation of such 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 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 Notes at their respective addresses set forth in the register of
holders of 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. Holders who receive payment in any currency other
than the EURO must make arrangements at their own expense.
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 will, without liability on its part and without having regard
to the interests of individual Holders (i) choose the Chosen Currency of the ECU
or (ii) U.S. dollars in which all payments due on that date with respect to
Notes will be made. The amount of each payment in the Chosen Currency will 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 will, where practicable, be given to Holders of 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 Company will, without
liability on its part and without having regard to the interests of individual
Holders of Notes, choose the Chosen Currency in which all payments with respect
to 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 will 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 the Day of
Valuation will be determined on the following basis by the Luxembourg Exchange.
The Components will 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 will 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 will 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 Company and notified by it to the Luxembourg Exchange from one or more
leading banks selected by the Company, 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 Company 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 Company and notified by it to the Luxembourg Exchange
will 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
A-3
<PAGE> 86
period of two business days, the Luxembourg Exchange will 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 Company from one or more leading banks, as selected by the
Company (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 will determine the U.S. dollar equivalent of such Component on the
basis of such cross rates if the Company 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 Company, 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 will 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 Company or the Exchange will be
at its sole discretion and will, in the absence of manifest error, be conclusive
for all purposes and binding on the Company and all Holders.
3. PAYING AGENT AND REGISTRAR. Initially, The Chase Manhattan Bank,
the Trustee under the Indenture, will act as Paying Agent and Registrar at its
offices in the City and State of New York and, so long as the Notes are listed
on the Luxembourg Stock Exchange, the Company initially appoints Banque
Internationale a Luxembourg to act as paying agent in Luxembourg. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated
as of March 18, 1998 ("Indenture") between the Company and the Trustee. The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code ss.ss. 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the indenture shall govern and be
controlling. The Notes are unsecured obligations of the Company limited to EURO
235 million in aggregate principal amount at maturity.
5. OPTIONAL REDEMPTION.
(a) The Company shall not have the option to redeem the Notes prior
to April 1, 2002. Thereafter, the Company shall have the option to redeem the
Notes, in whole or in part, upon not less than 30 nor more than 60 days' notice,
at the redemption prices (expressed as percentages of Accreted Value) set forth
below plus, in the case of any redemption subsequent to Full Accretion Date,
accrued and unpaid interest and Liquidated Damages, if any, thereon to the
applicable redemption date, if redeemed during the twelve-month period beginning
on April 1 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002..................................... 104.750%
2003..................................... 103.167%
2004..................................... 101.583%
2005..................................... 100.000%
</TABLE>
A-4
<PAGE> 87
(b) The Company will have the right to purchase Notes in the open
market or otherwise. Any Notes so purchased may be resold at the Company's
discretion if not surrendered for cancellation pursuant to the Indenture.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Company shall be required
to make an offer (a "Change of Control Offer") to repurchase all or any part
(equal to EURO 1,000 in principal amount at maturity or an integral multiple
thereof) of each Holder's Notes at an offer price equal to 101% of the Accreted
Value thereof on the date of purchase (if prior to April 1, 2003) or 101% of the
aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the date of purchase (if on or after
April 1, 2003) (in either case, the "Change of Control Payment"). Within 10 days
following any Change of Control, the Company shall mail a notice to each Holder
setting forth the procedures governing the Change of Control Offer as required
by the Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sales,
within five days of each date on which the aggregate amount of Excess Proceeds
exceeds $5 million, the Company shall commence an offer to all Holders of Notes
(as "Asset Sale Offer") pursuant to Section 3.09 of the Indenture to purchase
the maximum principal amount of Notes that may be purchased out of the Excess
Proceeds at an offer price in cash in an amount equal to 100% of the Accreted
Value thereof on the date fixed for the closing of such offer (if prior to April
1, 2003) or 100% of the principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date fixed for the
closing of such offer (if on or after April 1, 2003), in accordance with the
procedures set forth in the Indenture. To the extent that the aggregate amount
of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company (or such Subsidiary) may use such deficiency for general
corporate purposes. If the aggregate principal amount of Notes surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes to be purchased on a pro rata basis. Holders of Notes that are the
subject of an offer to purchase will receive an Asset Sale Offer from the
Company prior to any related purchase date and may elect to have such Notes
purchased by completing the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than EURO 1,000 may be redeemed in part but only in whole
multiples of EURO 1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in denominations of EURO 1,000 and integral multiples of
EURO 1,000. The transfer of Notes may be registered and Notes may be exchanged
as provided in the Indenture. The Registrar and the
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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
need not exchange or register the transfer of any Note or portion of a Note
selected for redemption, except for the unredeemed portion of any Note being
redeemed in part. Also, the Company need not exchange or register the transfer
of any Notes for a period of 15 days before a selection of Notes to be redeemed
or during the period between a record date and the corresponding Interest
Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture or the Notes may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Notes voting as a single class, and any existing default or compliance with any
provision of the Indenture or the Notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes voting
as a single class. Without the consent of any Holder of a Note, the Indenture or
the Notes may be amended or supplemented to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition to or in place of
certificated Notes, to provide for the assumption of the Company's obligations
to Holders of the Notes in 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 Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder or to
comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) failure to
pay for 30 days in the payment when due of interest or Liquidated Damages on the
Notes when the same becomes due and payable and the default continues for a
period of 30 days; (ii) default in payment when due of principal, Accreted Value
or Liquidated Damages, if any, of the Notes at maturity, upon acceleration,
repurchase or otherwise, (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 its
obligations under any of the provisions of Section 4.07, 4.09, 4.10 or 4.15 of
the Indenture; (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 the Company by the Trustee or the Holders of at
least 25% in principal amount of the Notes then outstanding voting as a single
class to comply with certain other agreements in the Indenture or the 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 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;
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<PAGE> 89
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 Notes may declare all the
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, all outstanding Notes will become due and payable without further
action or notice. Holders may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest. The Holders of a
majority in aggregate principal amount of the Notes then outstanding by notice
to the Trustee may on behalf of the Holders of all of the Notes waive any
existing Default or Event of Default and its consequences under the Indenture
except a continuing Default or Event of Default in the payment of the principal
of the 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.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the A/B Exchange
Registration Rights Agreement dated as of March 18, 1998, between the Company
and the parties named on the signature pages thereof (the "Registration Rights
Agreement").
18. CUSIP AND ISIN NUMBERS. The Company has caused CUSIP or ISIP, as
applicable, numbers to be printed on the Notes and the Trustee may use CUSIP or
ISIP, as applicable, numbers in notices of redemption as a convenience to
Holders. No representation is made as to the
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accuracy of such numbers either as printed on the Notes or as contained in any
notice of redemption and reliance may be placed only on the other identification
numbers placed thereon.
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<PAGE> 91
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Cellular Communications International, Inc.
110 East 59th Street
New York, NY 10022
Attention: Chief Financial Officer
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<PAGE> 92
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- ------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint_______________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- ------------------------------------------------------------------------------
Date:
Your Signature:
--------------------
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee.
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<PAGE> 93
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
|_| Section 4.10 |_| Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: EURO ________
Date: Your Signature:
------- -------------------------
(Sign exactly as your name appears
on the Note)
Tax Identification No:
------------------
Signature Guarantee.
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<PAGE> 94
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an
interest in another Global Note or for a Definitive Note, or exchanges of a part
of another Global Note or Definitive Note for an interest in this Global Note,
have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of decrease at maturity of
in Amount of increase this Global Note Signature of
Principal Amount in Principal Amount following such authorized officer
at maturity of at maturity of decrease of Trustee or
Date of Exchange this Global Note this Global Note (or increase) Note Custodian
- ---------------- ---------------- ---------------- ------------- --------------
<S> <C> <C> <C> <C>
</TABLE>
A-12
<PAGE> 95
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Cellular Communications International, Inc.
110 East 59th Street
New York, NY 10022
Attention: Chief Financial Officer
The Chase Manhattan Bank
450 West 33rd Street
New York, NY 10001
Re: 9-1/2% Senior Discount Notes due 2005
Reference is hereby made to the Indenture, dated as of March 18,
1998 (the "Indenture"), between Cellular Communications International, Inc., as
issuer (the "Company"), and The Chase Manhattan Bank, as trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
______________, (the "Transferor") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of EURO ___________ in such Note[s] or interests (the
"Transfer"), to __________ (the "Transferee"), as further specified in Annex A
hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. |_| Check if Transferee will take delivery of a beneficial interest in the
144A/Regulation S Global Note or a Definitive Note Pursuant to Rule 144A. The
Transfer is being effected pursuant to and in accordance with Rule 144A under
the United States Securities Act of 1933, as amended (the "Securities Act"),
and, accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A/Regulation S Global Note and/or the
Definitive Note and in the Indenture and the Securities Act.
2. |_| Check if Transferee will take delivery of a beneficial interest in the
144A/Regulation S Global Note or a Definitive Note pursuant to Regulation S. The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and, accordingly, the Transferor hereby further
certifies that (i) the Transfer is not being made to a person in the United
States and (x) at the time the buy order was originated, the Transferee was
outside the United States or such Transferor and any Person
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<PAGE> 96
acting on its behalf reasonably believed and believes that the Transferee was
outside the United States or (y) the transaction was executed in, on or through
the facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been made in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S under the Securities Act and (iii) the transaction is not
part of a plan or scheme to evade the registration requirements of the
Securities Act. Upon consummation of the proposed transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will be subject to the restrictions on Transfer enumerated in the Private
Placement Legend printed on the 144A/Regulation S Global Note and/or the
Definitive Note and in the Indenture and the Securities Act.
3. |_| Check and complete if Transferee will take delivery of a beneficial
interest in the 144A/Regulation S Global Note or a Definitive Note pursuant to
any provision of the Securities Act other than Rule 144A or Regulation S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act and
any applicable blue sky securities laws of any state of the United States, and
accordingly the Transferor hereby further certifies that (check one):
(a) |_| such Transfer is being effected pursuant to and in
accordance with Rule 144 under the Securities Act;
or
(b) |_| such Transfer is being effected to the Company or a
subsidiary thereof;
or
(c) |_| such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act.
4. |_| Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Note or of an Unrestricted Definitive Note.
(a) |_| Check if Transfer is pursuant to Rule 144. (i) The Transfer
is being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.
(b) |_| Check if Transfer is Pursuant to Regulation S. (i) The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in
the Indenture and the
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<PAGE> 97
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.
(c) |_| Check if Transfer is Pursuant to Other Exemption. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company.
---------------------------
[Insert Name of Transferor]
By:
-------------------------
Name:
Title:
Dated:
-------, -------
3
<PAGE> 98
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) |_| a beneficial interest in the 144A/Regulation S Global Note
(CUSIP/ISIN _______ ), or
(b) |_| a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) |_| a beneficial interest in the:
(i) |_| 144A/Regulation S Global Note (CUSIP/ISIN _____ ), or
(ii) |_| Unrestricted Global Note (CUSIP/ISIN _____ ); or
(b) |_| a Restricted Definitive Note; or
(c) |_| an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
4
<PAGE> 99
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Cellular Communications International, Inc.
110 East 59th Street
New York, NY 10022
Attention: Chief Financial Officer
The Chase Manhattan Bank
450 West 33rd Street
New York, NY 10001
Re: 9-1/2% Senior Discount Notes due 2005
(CUSIP/ISIN______________)
Reference is hereby made to the Indenture, dated as of March 18,
1998 (the "Indenture"), between Cellular Communications International, Inc., as
issuer (the "Company"), and The Chase Manhattan Bank, as trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
____________, (the "Owner") owns and proposes to exchange the
Note[s] or interest in such Note[s] specified herein, in the principal amount of
EURO ____________ in such Note[s] or interests (the "Exchange"). In connection
with the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests
in a Restricted Global Note for Unrestricted Definitive Notes or Beneficial
Interests in an Unrestricted Global Note
(a) |_| Check if Exchange is from beneficial interest in a
Restricted Global Note to beneficial interest in an Unrestricted Global Note. In
connection with the Exchange of the Owner's beneficial interest in a Restricted
Global Note for a beneficial interest in an Unrestricted Global Note in an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to the
Global Notes and pursuant to and in accordance with the United States Securities
Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
beneficial interest in an Unrestricted Global Note is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.
(b) |_| Check if Exchange is from beneficial interest in a
Restricted Global Note to Unrestricted Definitive Note. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note for an
Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the
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<PAGE> 100
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.
(c) |_| Check if Exchange is from Restricted Definitive Note to
beneficial interest in an Unrestricted Global Note. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) |_| Check if Exchange is from Restricted Definitive Note to
Unrestricted Definitive Note. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests
in Restricted Global Notes for Restricted Definitive Notes or Beneficial
Interests in Restricted Global Notes
(a) |_| Check if Exchange is from beneficial interest in a
Restricted Global Note to Restricted Definitive Note. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note for a
Restricted Definitive Note with an equal principal amount, the Owner hereby
certifies that the Restricted Definitive Note is being acquired for the Owner's
own account without transfer. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Restricted Definitive Note
issued will continue to be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Definitive Note and in
the Indenture and the Securities Act.
(b) |_| Check if Exchange is from Restricted Definitive Note to
beneficial interest in a Restricted Global Note. In connection with the Exchange
of the Owner's Restricted Definitive Note for a beneficial interest in the
144A/Regulation S Global Note with an equal principal amount, the Owner hereby
certifies (i) the beneficial interest is being acquired for the Owner's own
account without transfer and (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to the Restricted Global Notes and
pursuant to and in accordance with the Securities Act, and in compliance with
any applicable blue sky securities laws of any state of the United States. Upon
consummation of the proposed Exchange in accordance with the terms of the
Indenture, the beneficial interest issued will be
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<PAGE> 101
subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the relevant Restricted Global Note and in the Indenture and
the Securities Act.
<PAGE> 102
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company.
-----------------------------------
[Insert Name of Owner]
By:
-------------------------------
Name:
Title:
Dated:
-------, ------
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Experts" and
"Selected Financial Data" and to the incorporation by reference of our report
dated March 25, 1998 with respect to the financial statements of Cellular
Communications International, Inc. for the years ended December 31, 1997, 1996
and 1995 included in the Annual Report (Form 10-K) for 1997 filed with the
Securities and Exchange Commission in the Registration Statement (Form S-4) and
related Prospectus of Cellular Communications International, Inc. for the
registration of senior notes.
ERNST & YOUNG LLP
New York, New York
April 14, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement
on Form S-4 No. 333- of our report dated March 25, 1998 on our audit of the
financial statements of Omnitel Sistemi Radiocellulari Italiani S.p.A. and our
report dated March 25, 1998 on our audit of the financial statements of Omnitel
Pronto Italia S.p.A. We also consent to the reference to our firm under the
caption "Experts".
COOPERS & LYBRAND S.p.A.
Milan, Italy.
April 10, 1998
