<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 12, 1998.
REGISTRATION NO. 333-50169
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
AMENDMENT NO. 1
TO
FORM S-3
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 Identification No.)
Incorporation or Organization) Classification Code No.)
</TABLE>
110 EAST 59TH STREET, NEW YORK, NY 10022, (212) 906-8480
(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 only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462 (b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SECURITY(1) OFFERING PRICE(1) FEE(1)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
6% Convertible Subordinated Notes Due
2005.................................. $86,250,000 100% $86,250,000 $25,444(3)
Common Stock, par value $0.01 per
share(2).............................. 2,159,128
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(i) under the Securities Act.
(2) Such number represents the number of shares of Common Stock as are initially
issuable upon conversion of the 6% Convertible Subordinated Notes Due 2005
registered hereby and, pursuant to Rule 416 under the Securities Act of
1933, such indeterminate number of shares of Common Stock as may be issued
from time to time upon conversion of the Convertible Notes by reason of
adjustment of the conversion price in certain contingencies outlined in the
prospectus.
(3) Previously paid.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on each date as the Commission, acting pursuant to said
Section 8(a), may determine.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION DATED MAY 12, 1998
PROSPECTUS
, 1998
$86,250,000
CELLULAR COMMUNICATIONS
INTERNATIONAL, INC.
6% CONVERTIBLE SUBORDINATED NOTES DUE 2005
This Prospectus relates to the 6% Convertible Subordinated Notes Due 2005
(the "Convertible Notes" or the "Securities") of Cellular Communications
International, Inc. (the "Company") and the shares of the Company's stock, par
value $.01 per share ("Common Stock"), issuable upon conversion of the
Convertible Notes. The Convertible Notes were issued and sold on March 18, 1998
(the "Original Offering") in transactions exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
to persons reasonably believed by the Initial Purchasers (as defined) of the
Convertible Notes to be "qualified institutional buyers" (as defined) by Rule
144A under the Securities Act) or in transactions complying with the provisions
of Regulation S under the Securities Act. The Convertible Notes and the Common
Stock issuable upon conversion thereof may be offered and sold from time to time
by the holders named herein or by their transferees, pledgees, donees or their
successors (collectively, the "Selling Holders") pursuant to this Prospectus.
The Registration Statement of which this Prospectus is a part has been filed
with the Securities and Exchange Commission pursuant to a registration rights
agreement dated as of March 18, 1998 (the "Registration Rights Agreement") among
the Company and the Initial Purchasers, entered into in connection with the
Original Offering.
The Convertible Notes will mature on April 1, 2005. Interest on the
Convertible Notes will be paid semi-annually in cash in arrears on October 1 and
April 1 of each year, commencing October 1, 1998. The Convertible Notes are
convertible at the option of the holder thereof at any time prior to the close
of business on the Stated Maturity of the Convertible Notes, unless previously
redeemed, into shares of Common Stock of the Company, at a conversion price of
$39.947 per share, subject to adjustment in certain events. On May 11, 1998, the
reported closing bid price of the Common Stock on the Nasdaq Stock Market's
National Market ("Nasdaq") (symbol "CCIL") was $43.25 per share.
The Convertible Notes are redeemable at the option of the Company, in whole
or in part, at any time on and after April 4, 2001, at the redemption prices set
forth herein. The Convertible Notes do not provide for any sinking fund. Upon a
Change of Control (as defined), holders of the Convertible Notes will have the
right, subject to certain restrictions and conditions, to require the Company to
purchase all or any part of the Convertible Notes at the principal thereof
together with accrued and unpaid interest to the date of purchase.
The Convertible Notes are unsecured obligations of the Company and are
subordinate in right of payment to all existing and future Senior Debt (as
defined) of the Company. In addition, the Convertible Notes are effectively
subordinated to all existing and future liabilities of the Company's
subsidiaries, partnerships and affiliated joint ventures.
As of December 31, 1997, on a pro forma basis after giving effect to the
offering by the Company of the Convertible Notes and a concurrent ECU
235,000,000 offering of 9 1/2% Senior Discount Notes Due 2005 (the "Senior
Notes") (collectively, the "Offerings") and the use of proceeds therefrom, the
Company would have had approximately $195.5 million of Senior Debt outstanding
and the Company's subsidiaries and minority owned affiliates would have had
approximately $1.4 billion of liabilities that effectively rank senior to the
Convertible Notes. The ability of the Company and its subsidiaries to incur
additional indebtedness and liabilities is not limited by the terms of the
Indenture (as defined) pursuant to which the Convertible Notes were issued.
The Convertible Notes and the Common Stock issuable upon conversion of the
Convertible Notes may be sold by the Selling Holders from time to time directly
to purchasers or through agents, underwriters or dealers. See "Plan of
Distribution." If required, the names of any such agents or underwriters
involved in the sale of the Convertible Notes and the Common Stock issuable upon
conversion of the Convertible Notes in respect of which this Prospectus is being
delivered and the applicable agent's commission, dealer's purchase price or
underwriter's discount, if any, will be set forth in an accompanying supplement
to this Prospectus (the "Prospectus Supplement").
The Selling Holders will receive all of the net proceeds from the sale of
the Convertible Notes and the Common Stock issuable upon conversion of the
Convertible Notes and will pay all underwriting discounts and selling
commissions, if any, applicable to the sale of the Convertible Notes and the
Common Stock issuable upon conversion of the Convertible Notes. The Company is
responsible for payment of all other expenses in connection with the performance
by the Company of its obligations under the Registration Rights Agreement.
The Selling Holders and any broker-dealers, agents or underwriters which
participate in the distribution of the Convertible Notes and the Common Stock
issuable upon conversion of the Convertible Notes may be deemed to be
"underwriters" within the meaning of the Securities Act, and any commission
received by them or purchased by them of the Convertible Notes and Common Stock
issuable upon conversion of the Convertible Notes at a price less than the
initial price to the public may be deemed to be underwriting commissions or
discounts under the Securities Act. See "Plan of Distribution" for a description
of indemnification arrangements.
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE MATTERS SET FORTH UNDER
THE CAPTION "RISK FACTORS" BEGINNING ON PAGE 9.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 3
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-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act with respect to the
Convertible Notes. 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 Convertible Notes, 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 Convertible Notes were
issued, to continue to file with the Commission, and to furnish the Holders of
the Convertible 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, 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 the
Offering 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.
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.
2
<PAGE> 4
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.
3
<PAGE> 5
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". All figures
regarding the number of shares of Common Stock outstanding, conversion rates and
share prices have been calculated after giving effect to the 3-for-2 stock split
by way of stock dividend, paid on April 14, 1998. 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.
4
<PAGE> 6
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%.
5
<PAGE> 7
THE CONVERTIBLE NOTES
Securities Offered......... $86,250,000 principal amount of 6% Convertible
Subordinated Notes due 2005.
Maturity................... April 1, 2005.
Interest Payment Dates..... October 1 and April 1 of each year, commencing
October 1, 1998.
Conversion................. The Convertible Notes, unless previously redeemed,
are convertible at the option of the holder at any
time at or prior to maturity, into shares of Common
Stock at a conversion price of $39.947 per share,
subject to adjustment in certain events. See
"Description of Securities -- Conversion."
Optional Redemption........ The Convertible Notes will be redeemable, in whole
or in part, at the option of the Company at any
time after April 4, 2001, at the redemption prices
set forth herein, plus accrued and unpaid interest
and Liquidated Damages, if any, to the redemption
date. See "Description of Securities -- Optional
Redemption."
Subordination.............. The Convertible Notes will be unsecured obligations
of the Company and will rank subordinate in right
of payment to all existing and future Senior
Indebtedness of the Company, including the Senior
Notes. In addition, the Convertible Notes are
effectively subordinated to all existing and future
liabilities of the Company's Subsidiaries and
Minority Owned Affiliates, including trade
payables. As of December 31, 1997, after giving pro
forma effect to the Offerings and the use of
proceeds therefrom, the Company would have had an
aggregate amount of Senior Indebtedness of
approximately $195.5 million outstanding and the
Company's Subsidiaries and Minority Owned
Affiliates would have had approximately $1.4
billion of liabilities that effectively rank senior
to the Convertible Notes. The ability of the
Company and its Subsidiaries to incur additional
indebtedness and liabilities is not limited by the
terms of the Indenture pursuant to which the
Convertible Notes will be issued. See "Description
of Securities -- Subordination."
Change of Control.......... In the event of a Change of Control (as defined),
the Company may be required to make an offer to all
holders of Convertible Notes to purchase their
Convertible Notes at an offer price equal to 101%
of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any.
Use of Proceeds............ The Selling Holders will receive all of the net
proceeds from the Convertible Notes sold pursuant
to this Prospectus and the Common Stock issuable
upon conversion thereof sold pursuant to this
Prospectus. The Company will not receive any of the
proceeds from the sales by the Selling Holders of
the Convertible Notes or the Common Stock issuable
upon the conversion thereof.
Federal Income Tax
Consequences............. There are certain federal income tax consequences
associated with purchasing, holding and disposing
of the Convertible Notes. See "Certain United
States Federal Income Tax Considerations."
6
<PAGE> 8
RISK FACTORS
Prospective purchasers of the Securities should consider carefully all of
the information set forth in this Prospectus and, in particular, should evaluate
the matters set forth under "Risk Factors" for risks involved with an investment
in the Securities.
7
<PAGE> 9
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 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 (the "Tender Offer") regarding the Company's
13 1/4% Senior Discount Notes due 2000 (the "Original Notes")) 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.
8
<PAGE> 10
RISK FACTORS
In addition to the other information contained in this Prospectus,
prospective investors should consider carefully the following factors in
evaluating the Company and its business before purchasing the Securities offered
hereby.
SUBORDINATION OF CONVERTIBLE NOTES
The Convertible Notes are subordinated in right of payment to all existing
and future Senior Indebtedness of the Company, including the Senior Notes. As of
December 31, 1997, after giving pro forma effect to the Offerings and the use of
proceeds therefrom, the Company would have had an aggregate amount of Senior
Indebtedness of approximately $195.5 million outstanding and the Company's
Subsidiaries and Minority Owned Affiliates would have had approximately $1.4
billion of liabilities that effectively rank senior to the Convertible Notes. In
addition, the Convertible Notes are structurally subordinated in right of
payment to all Indebtedness and other liabilities (including trade payables) of
the Company's Subsidiaries and Minority Owned Affiliates. See "Description of
Securities -- Subordination."
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 amount of capital required and the need for large numbers of
technical operating personnel have 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 Senior 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 Securities will
include, among other things, covenants limiting the incurrence of additional
debt and liens and the payment of dividends. See "Description of
Securities -- 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.
9
<PAGE> 11
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
Securities 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 Securities 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 the substantial corporate income taxes which could be due in the event
of such sale) will be sufficient to repay the Securities 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 Securities, 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 Securities.
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 Securities or in order to satisfy its obligations
under the Indenture in the event of a Change of Control or to pay the Securities
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
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<PAGE> 12
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 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.
11
<PAGE> 13
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 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
12
<PAGE> 14
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 rates will not have a material adverse effect on the Company. See
"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
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<PAGE> 15
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: 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-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.
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<PAGE> 16
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 Convertible Notes were originally offered in March 1998 to a small
number of institutional buyers for trading in the PORTAL market. The
Registration Rights Agreement does not obligate the Company to keep the
Registration Statement of which this Prospectus is a part effective after the
second anniversary of the date when the Registration Statement is declared
effective, or, if earlier, the date when all the Convertible Notes and the
Common Stock issuable on conversion thereof covered by the Registration
Statement have been sold pursuant to the Registration Statement. In addition,
the Company is permitted by the terms of the Registration Rights Agreement to
suspend use of this Prospectus during certain periods and in certain
circumstances relating to pending corporate developments and public filings with
the Commission and similar events. The Company does not intend to apply for
listing of the Convertible Notes on any securities exchange or to seek approval
for quotation through any automated quotation system. Accordingly, there can be
no assurance regarding the future development of a market for the Convertible
Notes or the ability of holders to sell the Convertible Notes or the price at
which such holders may be able to sell their Convertible Notes. If any such
market were to develop, the Convertible Notes could trade at prices that may be
substantially lower than the initial offering price. There can be no assurance
as to the development or as to the liquidity of any trading market that may
develop for the Convertible Notes.
There can be no assurance that the market prices for Company's securities
including the Convertible Notes and the Common Stock issuable on conversion
thereof will not be subject to substantial fluctuations. Factors such as
fluctuations in the operating results of the Company, announcements of
technological innovations or events affecting others in the industries in which
the Company operates, changes in governmental legislation or regulation,
currency and exchange rate fluctuations and general economic conditions may have
significant effect on the market prices of its securities, including the
Convertible Notes.
ANTI-TAKEOVER MATTERS
Certain provisions of the Indenture and the indenture governing the Senior
Notes may have the effect of delaying or preventing transactions involving a
Change of Control of the Company, including transactions in which stockholders
might otherwise receive a possible substantial premium for their shares over
then current market prices, and may limit the ability of stockholders to approve
transactions that they may deem to be in their best interest.
A Change of Control would require the Company to make an offer to purchase
all the Convertible Notes and the Senior Notes, may require the Company to
refinance substantial amounts of its indebtedness and would impose other
significant obligations on the Company. The inability of the Company to purchase
all or some of the Convertible Notes and the Senior Notes for purchase would
also constitute an event of default under the Indenture and the indenture
governing the Senior Notes, which would have certain adverse consequences to the
Company and holders of the Convertible Notes.
The Certificate of Incorporation of the Company as currently in effect
contains certain provisions which may have the effect, alone or in combination
with each other or with the existence of authorized but unissued Common Stock
and any series of preferred stock, of precluding or rendering more difficult a
hostile takeover, making it more difficult to remove or change the composition
of the Company's incumbent board of directors and its officers, being adverse to
stockholders who desire to participate in a tender offer and depriving
15
<PAGE> 17
stockholders of possible opportunities to sell their shares at temporarily
higher prices. See "Description of Capital Stock -- Certain Special Provision."
In particular, the rights issuable pursuant to the stockholder rights plan of
the Company have certain anti-takeover effects as they will cause substantial
dilution to a person or group that acquires a substantial interest in the
Company without the prior approval of the Board of Directors. The effect of such
rights may be to inhibit a change in control of the Company (including through a
third party tender offer at a price which reflects a premium to then prevailing
trading prices) that may be beneficial to the Company's stockholders. See
"Description of Capital Stock -- Certain Special Provisions -- Stockholder
Rights Plan." Under the Company's Certificate of Incorporation, holders of
Common Stock and holders of the Series A Junior Participating Preferred Stock
(the "Junior Preferred Stock") issued upon exercise of such rights generally
vote as a class, with each share of Common Stock being entitled to one vote per
share and each share of Junior Preferred Stock being entitled to 100 votes per
share. As a result of the provisions of the Certificate of Incorporation and the
ownership of the Company, no change of control requiring stockholder approval is
possible without the consent of the owners of the Junior Preferred Stock.
NO INTENTION TO PAY DIVIDENDS
The Company has never paid cash dividends to its shareholders since
inception and currently does not intend to pay any cash dividends on its Common
Stock for the foreseeable future. The indenture governing the Senior Notes will
also restrict payment of dividends. The Company's ability to pay dividends is
primarily dependent upon receipt of dividends and distributions from Omnitel and
any future owned operating companies in which it may have an ownership interest
and over which it may have limited affirmative control. See "-- Holding Company
Structure; Minority Interests; Limitation on Access to Cash Flow." The Senior
Notes will also restrict payments of dividends. See "Dividend Policy" and
"-- Operating Losses."
VOLATILITY OF COMMON STOCK AND CONVERTIBLE NOTES
The market price of the Company's Common Stock has been subject to
volatility and, in the future, the market price of the Common Stock and the
Convertible Notes could be subject to wide fluctuations in response to numerous
factors, many of which are beyond the Company's control. These factors include
actual or anticipated variations in the Company's operating results, earnings
releases by the Company and its competitors, changes in financial estimates by
securities analysts, market conditions in the industry and the general state of
the securities markets. These market fluctuations, as well as general economic
and market conditions such as recessions or international currency fluctuations,
may adversely affect the market price of the Company's Common Stock.
16
<PAGE> 18
CONCURRENT OFFERING
Concurrently with the consummation of the sale of the Convertible Notes,
the Company issued and sold in the Concurrent Offering EURO 235 million
aggregate principal amount of its Senior Notes, at a substantial discount to
their principal amount, to generate gross proceeds of approximately EURO 147
million, in a transaction exempt from, or not subject to, the registration
requirements of the Securities Act. The interest rate on the Senior Notes is
9.50%. The Senior Notes will mature on the seventh anniversary of their
issuance, unless previously redeemed. The Senior Notes will be redeemable, in
whole or in part, at the option of the Company, at any time after the fourth
anniversary of their issuance, at specified redemption prices. Upon a Change of
Control, holders of Senior Notes have the right to require the Company to
purchase all or any part of the Senior Notes at a purchase price equal to 101%
of the Accreted Value (as defined in the indenture governing the Senior Notes)
thereon as of the date of purchase, plus Liquidated Damages (as defined in the
Registration Rights Agreement), if any. The indenture governing the Senior Notes
contains customary restrictions that, among other things, limit the ability of
the Company to incur additional debt, to make investments and restricted
payments, to grant any liens, and to merge, consolidate or sell all or
substantially all of its assets.
The Senior Notes are senior unsecured obligations of the Company and rank
senior in right of payment to all future subordinated indebtedness of the
Company, including the Convertible Notes.
USE OF PROCEEDS
The Selling Holders will receive all of the net proceeds from the
Convertible Notes sold pursuant to this Prospectus and the Common Stock issuable
upon conversion thereof sold pursuant to this Prospectus.
The Company will not receive any of the proceeds from sales by the Selling
Holders of the Convertible Notes or the Common Stock issuable upon conversion
thereof.
The net proceeds originally received by the Company from the Offerings
after deducting the underwriting discounts and commissions and expenses of the
Offerings, were approximately $239.3 million, of which $202.0 million was used
repay borrowings under the Original Notes.
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is currently reported on the Nasdaq Stock
Market's National Market ("Nasdaq") under the symbol "CCIL." The following table
sets forth for the periods indicated, the high and low last sales price, as
reported on Nasdaq after giving retroactive effect to the 3-for-2 stock split by
way of stock dividend paid on April 14, 1998.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1996
First Quarter............................................... $26.83 $20.83
Second Quarter.............................................. 24.67 21.17
Third Quarter............................................... 23.83 16.50
Fourth Quarter.............................................. 22.67 17.00
1997
First Quarter............................................... $21.83 $17.83
Second Quarter.............................................. 22.83 16.08
Third Quarter............................................... 27.67 21.67
Fourth Quarter.............................................. 31.67 26.08
1998
First Quarter............................................... $45.33 $30.58
Second Quarter (through May 12, 1998)....................... $51.50 $40.50
</TABLE>
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<PAGE> 19
On May 11, 1998, the closing price for the Common Stock, as reported on
Nasdaq, was $43.25 per share. As of May 11, 1998, there were approximately 323
record holders of the Common Stock. This figure does not reflect beneficial
ownership of shares held in nominee name.
DIVIDEND POLICY
The Company has never paid cash dividends on its Common Stock and does not
currently expect to pay any cash dividends on its Common Stock for the
foreseeable future. The Company's ability to pay dividends is primarily
dependent upon receipt of dividends and distributions from Omnitel and any
future owned operating companies in which it may have an ownership interest and
over which it may have limited affirmative control. The indenture governing the
Senior Notes will also restrict payments of dividends. See "Risk Factors --
Holding Company Structure; Minority Interests; Limitations on Access to Cash
Flow."
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<PAGE> 20
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>
AT PERIOD
CALENDAR PERIOD HIGH LOW AVERAGE(1) 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.
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.
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.
19
<PAGE> 21
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 Senior 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.
20
<PAGE> 22
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 in this Prospectus.
<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>
21
<PAGE> 23
<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.
22
<PAGE> 24
BUSINESS
GENERAL
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 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 market, OPI has
since received 60 billion lire from TIM. See "Business -- Government
Regulation --
23
<PAGE> 25
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 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.
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.
24
<PAGE> 26
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
--------------------------- ---------
YEAR ENDED DECEMBER 31, ANALOG (EST.) GSM (EST.) GSM TOTAL
----------------------- ------------- ---------- --------- ----------
<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.
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
25
<PAGE> 27
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. 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
26
<PAGE> 28
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. 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
"DCS1800" 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
27
<PAGE> 29
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. 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
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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 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
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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").
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
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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
- 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
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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 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
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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 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 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:
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(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.
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
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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 represented on the board and has no active role in the
management of the Competing Business. Each of the
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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 l,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> 38
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.
37
<PAGE> 39
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. Mr.
Mintz has held similar positions with the predecessor of these companies since
June 1967. Mr. Mintz is
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<PAGE> 40
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.
39
<PAGE> 41
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock, as of May 12, 1998, after giving retroactive
effect to the 3-for-2 stock split by way of stock dividend 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 BENEFICIALLY PERCENT OF
EXECUTIVE OFFICERS, DIRECTORS AND PRINCIPAL STOCKHOLDERS OWNED(1) CLASS(2)
-------------------------------------------------------- ------------------- ----------
<S> <C> <C>
William B. Ginsberg(3)...................................... 1,016,420 5.92%
J. Barclay Knapp(4)......................................... 421,764 2.51
Richard J. Lubasch(5)....................................... 154,913 *
Gregg Gorelick(6)........................................... 60,659 *
Stanton N. Williams(7)...................................... 147,450 *
Del Mintz(8)................................................ 422,457 2.55
Sidney R. Knafel(9)......................................... 240,434 1.45
Alan J. Patricof(10)........................................ 72,178 *
Warren Potash(11)........................................... 52,877 *
All directors and officers as a group (9 in number)......... 2,589,152 14.43
Massachusetts Financial Services Company(12)................ 1,871,113 11.33
500 Boylston Street
Boston, MA 02116
President and Fellows of Harvard College(13)................ 905,325 5.48
600 Atlantic Avenue
Boston, MA 02210
T. Rowe Price Associates, Inc.(14).......................... 855,300 5.18
100 E. Pratt Street
Baltimore, MD 21202
</TABLE>
- ---------------
* Represents less than one percent.
(1) Includes shares of Common Stock purchasable upon the exercise of options
which are exercisable or become so in the next 60 days ("Presently
Exercisable Options").
(2) Includes Common Stock and Presently Exercisable Options.
(3) Includes 21,750 shares of Common Stock owned by Mr. Ginsberg's wife, as to
which shares Mr. Ginsberg disclaims beneficial ownership. Includes 656,673
shares of Common Stock subject to stock options granted pursuant to the
Option Plan.
(4) Includes 282,028 shares of Common Stock subject to stock options granted
pursuant to the Option Plan.
(5) Includes 187 shares of Common Stock owned by Mr. Lubasch as custodian for
his child, as to which shares Mr. Lubasch disclaims beneficial ownership.
Includes 111,784 shares of Common Stock subject to stock options granted
pursuant to the Option Plan.
(6) Includes 58,252 shares of Common Stock subject to stock options granted
pursuant to the Option Plan.
(7) Includes 111,000 shares of Common Stock subject to stock options granted
pursuant to the Option Plan.
(8) Includes 20,740 shares of Common Stock owned by Mr. Mintz's children or by
Mr. Mintz's children as trustees for their children, 43 shares owned by Mr.
Mintz's wife and 22,876 shares which were purchased by CBDM, Inc., a
subchapter "S" Corporation that is owned by the children and grandchildren
of Mr. Mintz. Mr. Mintz acts in an advisory capacity to the shareholders of
CBDM, Inc. Mr. Mintz disclaims beneficial ownership of all of the shares
referenced in this note. Includes 52,782 shares of Common Stock subject to
stock options granted pursuant to the Director Plan and pursuant to certain
stock option agreements not pursuant to the plan.
(9) Includes 65,311 shares of Common Stock owned by a trust account for the
benefit of a child of Mr. Knafel, as to which shares Mr. Knafel disclaims
beneficial ownership. An additional 65,311 shares
40
<PAGE> 42
are owned by an adult child of Mr. Knafel, as to which shares Mr. Knafel
disclaims beneficial ownership. Includes 52,782 shares of Common Stock
subject to stock options granted pursuant to the Director Plan and pursuant
to certain stock option agreements not pursuant to the plan.
(10) Includes 117 shares of Common Stock owned by Mr. Patricof's wife, 454
shares owned by, or in trust for the benefit of, Mr. Patricof's children as
to which Mr. Patricof disclaims beneficial ownership. Includes 52,782
shares of Common Stock subject to stock options granted pursuant to the
Director Plan and pursuant to certain stock option agreements not pursuant
to the plan.
(11) Includes 52,782 shares of Common Stock subject to stock options granted
pursuant to the Director Plan and pursuant to certain stock option
agreements not pursuant to the plan.
(12) Based solely upon a Form 13-G, amendment No. 2, dated February 13, 1998,
filed by Massachusetts Financial Services Company.
(13) Based solely upon a Form 13-G, dated February 12, 1998, filed by President
and Fellows of Harvard College.
(14) Based solely upon a Form 13-G, dated February 12, 1998, filed by T. Rowe
Price Associates, Inc.
41
<PAGE> 43
DESCRIPTION OF SECURITIES
Set forth below is a summary of certain provisions of the Convertible
Notes. The Convertible Notes were issued pursuant to an indenture (the
"Indenture") to be dated as of March 18, 1998, by and between the Company and
The Chase Manhattan Bank, as trustee (the "Trustee"). The following summary of
the Convertible Notes, the Indenture and the Registration Rights Agreement does
not purport to be complete and is subject to, and is qualified in its entirety
by, reference to all of the provisions of the Indenture and the Registration
Rights Agreement, including the definitions therein of certain terms. The
Indenture and the Registration Rights Agreement can be obtained from the Company
upon request. Capitalized terms used herein without definition have the meanings
ascribed to them in the Indenture or the Registration Rights Agreement, as
appropriate. Wherever particular provisions or defined terms of the Indenture
(or the form of Note which is part thereof) or the Registration Rights Agreement
are referred to in this summary, such provisions or defined terms are
incorporated by reference as a part of the statements made and such statements
are qualified in their entirety by such reference. Certain definitions of terms
used in the following summary are set forth under "-- Certain Definitions"
below.
GENERAL
The Convertible Notes are general, unsecured obligations of the Company,
limited in aggregate principal amount to $86,250,000. The Convertible Notes are
subordinated in right of payment to all Senior Indebtedness, as described under
"-- Subordination" below. The Convertible Notes are issued only in fully
registered form, without coupons, in denominations of $1,000 and integral
multiples thereof.
The Convertible Notes will mature on April 1, 2005. The Convertible Notes
bear interest at the rate per annum stated on the cover page of this Prospectus
from March 18, 1998, or from the most recent Interest Payment Date to which
interest has been paid or provided for, payable semi-annually in cash in arrears
on October 1 and April 1 of each year, commencing October 1, 1998 to the persons
in whose names such Convertible Notes are registered at the close of business on
September 15 and March 15 immediately preceding such Interest Payment Date.
Principal of, premium, if any, and interest on, and Liquidated Damages with
respect to, the Convertible Notes is payable, the Convertible Notes will be
convertible and the Convertible Notes may be presented for registration of
transfer or exchange, at the office or agency of the Company maintained for such
purpose, which office or agency shall be maintained in the Borough of Manhattan,
The City of New York. Interest will be calculated on the basis of a 360-day year
consisting of twelve 30-day months.
At the option of the Company, payment of interest and Liquidated Damages
may be made by check mailed to the Holders of the Convertible Notes at the
addresses set forth upon the registry books of the Company. No service charge
will be made for any registration of transfer or exchange of Convertible Notes,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith. Until otherwise
designated by the Company, the Company's office or agency will be the corporate
trust office of the Trustee presently located in New York City.
The Indenture does not contain any financial covenants or any restrictions
on the payment of dividends, the repurchase of securities of the Company or the
incurrence of Indebtedness or Senior Indebtedness. The Indenture contains no
covenants or other provisions to afford protection to Holders of Convertible
Notes in the event of a highly leveraged transaction or a change of control of
the Company, except to the limited extent described under "-- Repurchase of
Convertible Notes at the Option of the Holder Upon a Change of Control" below.
CONVERSION RIGHTS
Each Holder of Convertible Notes has the right at any time prior to the
close of business on the Stated Maturity of the Convertible Notes, unless
previously redeemed or repurchased, at the Holder's option, to convert any
portion of the principal amount thereof that is $1,000 or an integral multiple
thereof into shares of Common Stock at the Conversion Price set forth on the
cover page of this Prospectus (subject to adjustment
42
<PAGE> 44
as described below). The right to convert a Convertible Note called for
redemption or delivered for repurchase and not withdrawn will terminate at the
close of business on the fifth or second Business Day, respectively, immediately
prior to the Redemption Date or Repurchase Date for such Convertible Note,
unless the Company subsequently fails to pay the applicable Redemption Price or
Repurchase Price, as the case may be.
In the case of any Note that has been converted into Common Stock after any
Record Date, but on or before the next Interest Payment Date, interest, the
stated due date of which is on such Interest Payment Date, shall be payable on
such Interest Payment Date notwithstanding such conversion, and such interest
shall be paid to the Holder of such Note who is a Holder on such Record Date.
Any Note converted after any Record Date but before the next Interest Payment
Date (other than Convertible Notes called for redemption within such period)
must be accompanied by payment of an amount equal to the interest payable on
such Interest Payment Date on the principal amount of Convertible Notes being
surrendered for conversion; provided that no such payment shall be required with
respect to interest payable on April 4, 2001. No fractional shares of Common
Stock will be issued upon conversion but, in lieu thereof, an appropriate amount
will be paid in cash by the Company based on the market price of Common Stock
(determined in accordance with the Indenture) at the close of business on the
day of conversion. As a result of the foregoing provisions, Holders that
surrender Convertible Notes for conversion on a date that is not an Interest
Payment Date will not receive any interest for the period from the Interest
Payment Date next preceding the date of conversion to the date of conversion or
for any later period.
The Conversion Price will be subject to adjustment in certain events,
including (a) any payment of a dividend (or other distribution) payable in
Common Stock on any class of Capital Stock of the Company, (b) any issuance to
all or substantially all holders of Common Stock of rights, options or warrants
entitling them to subscribe for or purchase Common Stock at less than the then
current market price of Common Stock (determined in accordance with the
Indenture); provided, however, that if such rights, options or warrants are only
exercisable upon the occurrence of certain triggering events, then the
Conversion Price will not be adjusted until such triggering events occur, (c)
certain subdivisions, combinations or reclassifications of Common Stock, (d) any
distribution to all or substantially all holders of Common Stock of evidences of
indebtedness, shares of Capital Stock other than Common Stock, cash or other
assets (including securities, but excluding those dividends, rights, options,
warrants and distributions referred to above and excluding dividends and
distributions paid exclusively in cash and in mergers and consolidations to
which the third succeeding paragraph applies), (e) any distribution consisting
exclusively of cash (excluding any cash portion of distributions referred to in
(d) above, or cash distributed upon a merger or consolidation to which the third
succeeding paragraph applies) to all or substantially all holders of Common
Stock in an aggregate amount that, combined together with (i) all other such
all-cash distributions made within the then preceding 12 months in respect of
which no adjustments have been made and (ii) any cash and the fair market value
of other consideration paid or payable in respect of any tender or exchange
offer by the Company or any of its Subsidiaries for Common Stock concluded
within the preceding 12 months in respect of which no adjustment has been made,
exceeds 15% of the Company's market capitalization (defined as being the product
of the then current market price of the Common Stock times the number of shares
of Common Stock then outstanding) on the record date of such distribution, and
(f) the completion of a tender or exchange offer made by the Company or any of
its Subsidiaries for Common Stock to the extent that the aggregate
consideration, together with (i) any cash and other consideration payable in a
tender or exchange offer by the Company or any of its Subsidiaries for Common
Stock expiring within the 12 months preceding the expiration of such tender or
exchange offer in respect of which no adjustment has been made and (ii) the
aggregate amount of any such all-cash distributions referred to in (e) above to
all holders of Common Stock within the 12 months preceding the expiration of
such tender or exchange offer in respect of which no adjustments have been made,
exceeds 15% of the Company's market capitalization on the expiration of such
tender or exchange offer. No adjustment of the Conversion Price will be required
to be made until the cumulative adjustments amount to 1.0% or more of the
Conversion Price as last adjusted.
In the event of a taxable distribution to holders of Common Stock (or other
transaction) which results in any adjustment of the Conversion Price, the
Holders of Convertible Notes may, in certain circumstances, be deemed to have
received a distribution subject to United States federal income tax as a
dividend; in certain
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<PAGE> 45
other circumstances, the absence of such an adjustment may result in a taxable
dividend to the holders of Common Stock. See "Certain United States Federal
Income Tax Considerations".
The Company, from time to time and to the extent permitted by law, may
reduce the Conversion Price by any amount for any period of at least 20 Business
Days, in which case the Company shall give at least 15 days notice of such
reduction, if the Board of Directors has made a determination that such
reduction would be in the best interests of the Company, which determination
shall be conclusive. The Company may, at its option, make such reductions in the
Conversion Price, in addition to those set forth above, as the Board of
Directors deems advisable to avoid or diminish any income tax to holders of
Common Stock resulting from any dividend or distribution of stock (or rights to
acquire stock) or from any event treated as such for United States federal
income tax purposes. See "Certain United States Federal Income Tax
Considerations."
In case of any reclassification or change of outstanding shares of Common
Stock issuable upon conversion of the Convertible Notes (other than certain
changes in par value) or consolidation or merger of the Company with or into
another Person or any merger of another Person with or into the Company (with
certain exceptions), or in case of any sale, transfer or conveyance of all or
substantially all of the assets of the Company, each Convertible Note then
outstanding will, without the consent of any Holder of Convertible Notes, become
convertible only into the kind and amount of securities, cash and other property
receivable upon such reclassification, change, consolidation, merger, sale,
transfer or conveyance by a holder of the number of shares of Common Stock into
which such Convertible Note was convertible immediately prior thereto, after
giving effect to any adjustment event; provided, that if the kind or amount of
securities, cash and other property is not the same for each share of Common
Stock held immediately prior to such reclassification, change, consolidation,
merger, sale, transfer or conveyance, any Holder who fails to exercise any right
of election shall receive per share the kind and amount of securities, cash or
other property received per share by a plurality of non-electing shares.
The Company will use all reasonable efforts to cause all registrations to
be made with, and to obtain any approvals by, any governmental authority under
any Federal or state law of the United States that may be required on the part
of the Company in connection with the conversion of the Convertible Notes into
Common Stock. If at any time during the two-year period following the date of
the original issuance of the Convertible Notes a registration statement under
the Securities Act covering the shares of Common Stock issuable upon conversion
of the Convertible Notes is not effective or is otherwise unavailable for
effecting resales of such shares, shares of Common Stock issued upon conversion
of the Convertible Notes ("Restricted Shares") may not be sold or otherwise
transferred except in accordance with or pursuant to an exemption from, or
otherwise in a transaction not subject to, the registration requirements of the
Securities Act, and, if a registration statement under the Securities Act is not
effective or is otherwise unavailable for effecting resales of such shares at
the time of a conversion, the Restricted Shares will bear a legend to that
effect. The Transfer Agent for the Common Stock will not be required to accept
for registration of transfer any Restricted Shares, except upon presentation of
satisfactory evidence that these restrictions on transfer have been complied
with, all in accordance with such reasonable regulations as the Company may from
time to time agree with the Transfer Agent. Under certain circumstances, the
holders of the Restricted Shares will be entitled to Liquidated Damages during
such period. See "-- Registration Rights; Liquidated Damages."
SUBORDINATION
The Convertible Notes are general, unsecured obligations of the Company,
subordinated in right of payment to all existing and future Senior Indebtedness.
The Convertible Notes are structurally subordinated in right of payment to all
Indebtedness and other liabilities (including trade payables) of the Company's
Subsidiaries and Minority Owned Affiliates. At December 31, 1997, on a pro forma
basis after giving effect to the Offerings and the application of the net
proceeds therefrom, the Company would have had approximately $195.5 million of
Senior Indebtedness outstanding, and the Company's Subsidiaries and Minority
Owned Affiliates would have had approximately $1.4 billion of Senior
Indebtedness outstanding. The Indenture will not restrict the incurrence of
Senior Indebtedness or other Indebtedness by the Company or its Subsidiaries or
the Minority Owned Affiliates or the ability of the Company to transfer assets
or business operations to its
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<PAGE> 46
Subsidiaries, subject to the provisions described under "-- Repurchase of
Convertible Notes at the Option of the Holder Upon a Change of Control" and
"-- Merger, Consolidation or Sale of Assets" below.
The Indenture provides that no payment may be made by the Company, directly
or through any Subsidiary or Minority Owned Affiliate, on account of the
principal of, premium, if any, interest on or Liquidated Damages with respect
to, the Convertible Notes, or to acquire any of the Convertible Notes (including
repurchases of Convertible Notes at the option of the Holder) for cash or
property (other than Junior Securities), or on account of the redemption
provisions of the Convertible Notes, (i) upon the maturity of any Senior
Indebtedness, by lapse of time, acceleration (unless waived) or otherwise,
unless and until all principal of, premium, if any, and interest on and other
amounts payable in respect of Senior Indebtedness are first paid in full (or
such payment is duly provided for), or (ii) in the event of default in the
payment of any principal of, premium, if any, or interest on any Senior
Indebtedness when it becomes due and payable, whether at maturity or at a date
fixed for prepayment or by declaration or otherwise (collectively, a "Payment
Default"), unless and until such Payment Default has been cured or waived or
otherwise has ceased to exist. The payment of cash, property or securities
(other than Junior Securities) upon conversion of a Convertible Note will
constitute payment on a Convertible Note and therefore will be subject to the
subordination provisions in the Indenture.
Upon (i) the happening of an Event of Default (other than a Payment
Default) that permits, or would permit with (a) the passage of time, (b) the
giving of notice, (c) the making of any payment of the Convertible Notes then
required to be made or (d) any combination thereof (collectively, a "Non-Payment
Default"), the holders of Senior Indebtedness having a principal amount then
outstanding in excess of $10 million or their respective representatives
immediately to accelerate the maturity of such Senior Indebtedness and (ii)
written notice of such Non-Payment Default being given to the Company and the
Trustee by the holders of Senior Indebtedness or their respective
representatives (a "Payment Notice"), then, unless and until such Non-Payment
Default has been cured or waived or otherwise has ceased to exist, no payment
(by setoff or otherwise) may be made by or on behalf of the Company, directly or
through any Subsidiary or Minority Owned Affiliate, on account of the principal
of, premium, if any, interest on or Liquidated Damages with respect to, the
Convertible Notes, or to acquire or repurchase any of the Convertible Notes for
cash or property, or on account of the redemption provisions of the Convertible
Notes, in any such case other than payments made with Junior Securities.
Notwithstanding the foregoing, unless (i) the Senior Indebtedness in respect of
which such Non-Payment Default exists has been declared due and payable in its
entirety within 179 days after the Payment Notice is delivered as set forth
above (the "Payment Blockage Period"), and (ii) such declaration has not been
rescinded or waived, at the end of the Payment Blockage Period, the Company
shall be required to pay to the Holders of the Convertible Notes all regularly
scheduled payments on the Convertible Notes that were not paid during the
Payment Blockage Period due to the foregoing prohibitions (and upon the making
of such payments any acceleration of the Convertible Notes made during the
Payment Blockage Period shall be of no further force or effect) and to resume
all other payments as and when due on the Convertible Notes. Not more than one
Payment Notice may be given in any consecutive 360-day period, unless such Event
of Default or such other Events of Default have been cured or waived for a
period of not less than 90 consecutive days. In no event, however, may the total
number of days during which any Payment Blockage Period is or Payment Blockage
Periods are in effect exceed 179 days in the aggregate during any consecutive
360-day period.
Upon any distribution of assets of the Company, upon any dissolution,
winding up, total or partial liquidation or reorganization of the Company,
whether voluntary or involuntary, in bankruptcy, insolvency, receivership or a
similar proceeding or upon assignment for the benefit of creditors or any
marshaling of assets or liabilities (i) the holders of all Senior Indebtedness
will first be entitled to receive payment in full (or have such payment duly
provided for) before the Holders of the Convertible Notes are entitled to
receive any payment on account of the principal of, premium, if any, interest on
and Liquidated Damages with respect to, the Convertible Notes (other than Junior
Securities) and (ii) any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities (other than Junior
Securities) to which the Holders of the Convertible Notes or the Trustee on
behalf of the Holders would be entitled (by setoff or otherwise), except for the
subordination provisions contained in the Indenture, will be paid by the
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<PAGE> 47
liquidating trustee or agent or other person making such a payment or
distribution directly to the holders of Senior Indebtedness or their
representative to the extent necessary to make payment in full of all such
Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution, or provision therefor, to the holders of such Senior
Indebtedness.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company or any Subsidiary or Minority Owned
Affiliate (other than Junior Securities) shall be received by the Holders of the
Convertible Notes or the Trustee on behalf of the Holders or any Paying Agent at
a time when such payment or distribution is prohibited by the foregoing
provisions, such payment or distribution shall be held in trust for the benefit
of the holders of Senior Indebtedness, and shall be paid or delivered by such
Holders or the Trustee or such Paying Agent, as the case may be, to the holders
of the Senior Indebtedness remaining unpaid or unprovided for or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior
Indebtedness may have been issued, ratably according to the aggregate amounts
remaining unpaid on account of the Senior Indebtedness held or represented by
each, for application to the payment of all Senior Indebtedness remaining
unpaid, to the extent necessary to pay or to provide for the payment of all such
Senior Indebtedness in full after giving effect to any concurrent payment or
distribution, or provision therefor, to the holders of such Senior Indebtedness.
No provision contained in the Indenture or the Convertible Notes will
affect the obligation of the Company, which is absolute and unconditional, to
pay, when due, principal of, premium, if any, and interest on, and Liquidated
Damages with respect to, the Convertible Notes. The subordination provisions of
the Indenture and the Convertible Notes will not prevent the occurrence of any
Default or Event of Default under the Indenture or limit the rights of the
Trustee or any Holder of any Convertible Notes, subject to the preceding
paragraphs, to pursue any other rights or remedies with respect to the
Convertible Notes.
As a result of these subordination provisions, in the event of the
liquidation, bankruptcy, reorganization, insolvency, receivership or similar
proceeding or an assignment for the benefit of the creditors of the Company or
any of its Subsidiaries or a Minority Owned Affiliate or a marshalling of assets
or liabilities of the Company, its Subsidiaries and a Minority Owned Affiliate,
Holders of Convertible Notes may receive ratably less than other creditors.
REDEMPTION AT THE COMPANY'S OPTION
The Convertible Notes are not subject to redemption prior to April 4, 2001
and will be redeemable on and after such date at the option of the Company, in
whole or in part, upon not less than 30 nor more than 60 days' prior notice to
each Holder, at the following Redemption Prices (expressed as percentages of the
principal amount) if redeemed during the 12-month period commencing April 1 of
the years indicated below (April 4, in the case of the year 2001), in each case
(subject to the right of Holders of record on a Record Date to receive interest
due on an Interest Payment Date that is on or prior to such Redemption Date)
together with accrued and unpaid interest and Liquidated Damages, if any, to,
but excluding, the Redemption Date:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2001........................................................ 103.429%
2002........................................................ 102.571%
2003........................................................ 101.714%
2004........................................................ 100.857%
2005........................................................ 100.000%
</TABLE>
In the case of a partial redemption, the Trustee shall select the
Convertible Notes or portions thereof for redemption on a pro rata basis, by lot
or in such other manner it deems appropriate and fair. The Convertible Notes may
be redeemed in part in multiples of $1,000 only.
The Convertible Notes will not have the benefit of any sinking fund.
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<PAGE> 48
Notice of any redemption will be sent, by first-class mail, at least 30
days and not more than 60 days prior to the date fixed for redemption (the
"Redemption Date"), to the Holder of each Convertible Note to be redeemed to
such Holder's last address as then shown upon the registry books of the
Registrar. The notice of redemption must state the Redemption Date, the
Redemption Price and the amount of accrued interest and Liquidated Damages, if
any, to be paid. Any notice that relates to a Convertible Note to be redeemed in
part only must state the portion of the principal amount to be redeemed and must
state that on and after the Redemption Date, upon surrender of such Convertible
Note, a new Convertible Note or Convertible Notes in principal amount equal to
the unredeemed portion thereof will be issued. On and after the Redemption Date,
interest will cease to accrue on the Convertible Notes or portions thereof
called for redemption, unless the Company defaults in its obligations with
respect thereto.
REPURCHASE OF CONVERTIBLE NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF
CONTROL
Upon the occurrence of a Change of Control, each Holder of Convertible
Notes shall have the right to require the Company to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of such Holder's Convertible
Notes pursuant to the offer described below (the "Change of Control Offer") at a
purchase price equal to 101% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the Change of Control
Payment Date (the "Change of Control Payment") in accordance with the procedures
as set forth in the Indenture.
To the extent applicable and if required by law, the Company will comply
with the requirements of Rules 13e-4 and 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 the Convertible
Notes in connection with a Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (1) accept for payment Convertible Notes or portions thereof 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 Convertible
Notes or portions thereof so tendered and (3) deliver or cause to be delivered
to the Trustee the Convertible Notes so accepted together with an Officers'
Certificate stating the Convertible Notes or portions thereof tendered to the
Company. The Paying Agent shall promptly mail to each holder of Convertible
Notes so accepted payment in an amount equal to the purchase price for such
Convertible Notes, and the Trustee shall promptly authenticate and mail to each
holder a new Convertible Note equal in principal amount to any unpurchased
portion of the Convertible Notes surrendered, if any; provided that each such
new Convertible Note shall be in a principal amount of $1,000 or an integral
multiple thereof. The Company will publicly announce the results of the Change
of Control Offer on or as soon as practicable after the Change of Control
Payment Date.
Except as described above with respect to a Change of Control, the
Indenture does not contain any other provisions that permit the holders of the
Convertible Notes to require that the Company repurchase or redeem the
Convertible Notes in the event of a takeover, recapitalization or similar
restructuring. Although the Indenture contains several covenants, including the
provision described under "-- Merger, Consolidation or Sale of Assets" below,
the provisions of the Indenture may not necessarily afford holders of the
Convertible Notes protection in the event of a highly leveraged transaction,
reorganization, restructuring, merger or similar transaction involving the
Company that may adversely affect the holders of the Convertible Notes.
The Change of Control purchase feature of the Convertible Notes may in
certain circumstances make more difficult or discourage a takeover of the
Company, and, thus, the removal of incumbent management. The Change of Control
purchase feature, however, is not the result of management's knowledge of any
specific effort to accumulate the Company's stock or to obtain control of the
Company by means of a merger, tender offer, solicitation or otherwise, or part
of a plan by management to adopt a series of antitakeover provisions. Instead,
the Change of Control purchase feature is a result of negotiations between the
Company and the Initial Purchasers. Management has no present intention to
engage in a transaction involving a Change of Control, although it is possible
that the Company would decide to do so in the future. Subject to the limitations
discussed below, the Company could, in the future, enter into certain
transactions, including acquisitions, refinancings or other recapitalizations.
that would not constitute a Change of Control under the
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<PAGE> 49
Indenture, but that could increase the amount of indebtedness outstanding at
such time or otherwise affect the Company's capital structure or credit ratings.
As of December 31, 1997, after giving pro forma effect to the Offerings and
the use of the proceeds therefrom, the Company had outstanding $195.5 million
aggregate principal amount of its Senior Notes that rank senior in right of
payment to the Convertible Notes and which also have a Change of Control
purchase feature. Each holder of Senior Notes will have the right to require the
Company to repurchase all or any part of the Senior Notes upon a Change of
Control. See "Description of Certain Indebtedness." The Senior Notes will
represent on maturity an aggregate principal amount outstanding of $307.1
million. No assurance can be given that the Company will have sufficient funds
to satisfy its obligations to repurchase the Convertible Notes, the Senior Notes
and other debt that may become repayable or repurchasable upon a Change of
Control. The Company's ability to pay cash to the holders of Convertible Notes
pursuant to a Change of Control Offer may be restricted by the provisions of the
indenture governing the Senior Notes or limited by the Company's then existing
financial resources.
Credit agreements or other agreements relating to indebtedness of the
Company may contain prohibitions or restrictions on the Company's ability to
effect a Change of Control Payment. In the event a Change of Control occurs at a
time when such prohibitions or restrictions are in effect, the Company could
seek the consent of its lenders to the purchase of Convertible Notes or could
attempt to refinance the borrowings that contain such prohibition. If the
Company does not obtain such a consent or repay such borrowings, the Company
will be effectively prohibited from purchasing Convertible Notes. In such case,
the Company's failure to purchase tendered Convertible Notes would constitute an
Event of Default under the Indenture. Moreover, the events that constitute a
Change of Control under the Indenture may also constitute events of default
under future debt instruments or credit agreements of the Company. Such events
of default may permit the lenders under such debt instruments or credit
agreements to accelerate the debt and, if such debt is not paid or repurchased,
to enforce their security interests in what may be all or substantially all of
the assets of the Company. Any such enforcement may limit the Company's ability
to raise cash to repay or repurchase the Convertible Notes.
For the reasons described in the two immediately preceding paragraphs,
there can be no assurance that the Company will be able to repurchase the
Convertible Notes upon a Change of Control.
The Board of Directors of the Company may not, by itself, waive or modify
the Change of Control provisions of the Indenture. All the provisions of the
Indenture, including the Change of Control provision, may only be waived or
modified pursuant to the provisions described under "-- Amendment, Supplement
and Waiver" below.
"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
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<PAGE> 50
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 Convertible 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 Convertible Notes are under
publicly announced consideration for possible downgrading by the applicable
rating agency).
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Indenture provides that the Company may not consolidate or merge with
or into (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 to another
corporation, person or entity 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 such 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 such sale, assignment, transfer, lease, conveyance
or other disposition will have been made assumes all of the obligations of the
Company under the Registration Rights Agreement, the Convertible Notes and the
Indenture; pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee and (iii) immediately after such transaction no
Default or Event of Default exists.
The foregoing two paragraphs include a phrase relating to the sale,
assignment lease, transfer, conveyance exchange or other disposition of "all or
substantially all" of the Company's assets. 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.
LIMITATION ON STATUS AS INVESTMENT COMPANY
The Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary of the Company 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.
REPORTS
The Indenture provides that, whether or not required by the rules and
regulations of the Commission, so long as any Convertible Notes are outstanding,
the Company will furnish to the Holders of Convertible 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 effectiveness
of a shelf registration statement as 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.
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<PAGE> 51
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 Liquidated Damages
(as applicable), of the Convertible Notes at maturity, upon acceleration,
repurchase or otherwise; (ii) the failure to pay interest (including Liquidated
Damages, if any, under the Registration Rights Agreement) on the Convertible
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 above under the captions "Change of Control"; (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 Convertible
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 on the date of such
default (or, in the case of Omnitel or OPI, within 30 days from such date) (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 Convertible
Notes may declare all the Convertible Notes to be due and payable immediately,
subject to the provisions limiting payment described in "-- Subordination."
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 Convertible 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 Convertible Notes, the Company will become obligated to
pay the principal of, premium, interest or Liquidated Damages, if any, on the
Convertible Notes immediately. Holders of the Convertible Notes may not enforce
the Indenture or the Convertible Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Convertible 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 Convertible 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 Convertible Notes.
The Holders of a majority in principal amount of the Convertible Notes then
outstanding may, by notice to the Trustee, on behalf of the Holders of all of
the Convertible 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 Convertible Notes (which
would be required to be unanimous).
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<PAGE> 52
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.
AMENDMENTS, SUPPLEMENTS AND WAIVER
Except as provided in the next succeeding paragraphs, the Indenture or the
Convertible Notes may be amended or supplemented with the consent of the Holders
of at least a majority in principal amount of the Convertible Notes then
outstanding (including consents obtained in connection with a tender offer for
Convertible Notes), and any existing default or compliance with any provision of
the Indenture or the Convertible Notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Convertible
Notes (including consents obtained in connection with a tender offer for
Convertible Notes).
Without the consent of each Holder affected, an amendment or waiver may
not: (i) reduce the amount of Convertible Notes whose Holders must consent to an
amendment, supplement or waiver, (ii) reduce the principal of or change the
fixed maturity of any Convertible Note, (iii) reduce the rate of interest on any
Convertible Note, (iv) waive a Default or Event of Default in the payment of
principal of or premium, if any, on the Convertible Notes (except a rescission
of acceleration of the Convertible Notes by the Holders of at least a majority
in aggregate principal amount of the Convertible Notes and a waiver of the
payment default that resulted from such acceleration), (v) make any Convertible
Note payable in money other than that stated in the Convertible Notes, (vi) make
any change in the provisions of the Indenture relating to waivers of past
Defaults or the rights of Holders of Convertible Notes to receive payments or
principal of or premium, if any, on the Convertible Notes, or (vii) make any
change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of
Convertible Notes, the Company and the Trustee may amend or supplement the
Indenture or the Convertible Notes to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Convertible Notes in addition to or
in place of certificated Convertible Notes, to provide for the assumption of the
Company's obligations to Holders of the Convertible 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 Convertible 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.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Convertible Notes in accordance with the
Indenture. 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 Convertible Note accepted for repurchase.
The registered Holder of a Convertible Note will be treated as the owner of
it for all purposes.
BOOK ENTRY, DELIVERY AND FORM
The description of book-entry procedures in this Prospectus includes
summaries of certain rules and operating procedures of the Depositary that
affect transfers of interest in the global certificate or certificates issued in
connection with sales of Convertible Notes made pursuant to this Prospectus.
The Convertible Notes sold pursuant to this Prospectus will be represented
by one or more fully registered global notes (each, a "Global Note") as well as
Convertible Notes in definitive form and will be deposited upon issuance with,
or on behalf of, the Depositary and registered in the name of the Depositary or
its nominee (the "Global Note Registered Owner") or will remain in the custody
of the Trustee pursuant to a FAST Balance Certificate Agreement between the
Depositary and the Trustee. Except as set forth below, the
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<PAGE> 53
Global Note may be transferred, in whole and not in part, only to another
nominee of the Depositary or to a successor of the Depositary or its nominee.
The Depositary is a limited purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the Uniform Commercial Code as is effect in the State of
New York and a "clearing agency" registered pursuant to provisions of Section
17A of the Exchange Act. The Depositary was created to hold securities for its
participants' organizations (collectively, the "Participants") and to facilitate
the clearance and settlement of transactions in these securities between
Participants through electronic computerized book-entry changes in accounts of
its Participants, thereby eliminating the need for physical movement of
securities certificates. The Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. The Depositary is owned by a number of its Participants and by
the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the Depositary's
system is also available to other entities such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own securities
held by or on behalf of the Depositary only through the Participants of the
Indirect Participants. The ownership interest and transfer of ownership interest
of each actual purchaser of each security held by or on behalf of the Depositary
are recorded on the records of the Participants and Indirect Participants.
Purchases of Convertible Notes within the Depositary system must be made by
or through Participants. Pursuant to procedures established by the Depositary,
(i) upon deposit of the Global Note, the Depositary will credit the accounts of
Participants with portions of the principal amount of the Global Note and (ii)
ownership of such interests in the Global Note will be shown on, and the
transfers of ownership thereof will be effected only through, records maintained
by the Depositary (with respect to the Participants) or by the Participants and
the Indirect Participants (with respect to other owners of beneficial interests
in the Global Note). The laws of some states require that certain persons take
physical delivery in definitive form of securities that they own. Consequently,
the ability to transfer Convertible Notes will be limited to that extent.
The Depositary has no knowledge of the actual beneficial owners of the
Convertible Notes; the Depositary's records reflect only the identity of the
Participants to whose accounts such Convertible Notes are credited, which may or
may not be the beneficial owners. The Participants and Indirect Participants
will remain responsible for keeping account of their holdings on behalf of their
customers.
Except as described below, owners of interests in the Global Note will not
have Convertible Notes registered in their names, will not receive physical
delivery of Convertible Notes in definitive form and will not be considered the
registered owners thereof under the Indenture for any purpose.
None of the Company, the Trustee, nor any agent of the Company or the
Trustee will have any responsibility or liability for (i) any aspect of the
Depositary's records or any Participant's records relating to or payments made
on account of beneficial ownership interests in the Global Note, or for
maintaining, supervising or reviewing any of the Depositary's records or any
Participant's records relating to the beneficial ownership interests in the
Global Note or (ii) any other matter relating to the actions and practices of
the Depositary or any of its Participants.
Payments in respect of the principal of premium, if any, and interest on
any Convertible Notes registered in the name of the Global Note Registered Owner
on any relevant record date will be payable by the Trustee to the Global Note
Registered Owner in its capacity as the registered holder under the Indenture.
Under the terms of the Indenture, the Company and the Trustee will treat the
person in whose names the Convertible Notes, including the Global Notes, are
registered as the owners thereof for the purpose of receiving such payments and
for any and all other purposes whatsoever. Consequently, neither the Company,
the Trustees, nor any agent of the Company or the Trustee has or will have any
responsibility or liability for the payment of such amounts to beneficial owners
of the Convertible Notes or for any other matter relating to actions or
practices of the Depositary or any of its Participants. The Company understands
that the Depositary's current practices, upon receipt of any payment in respect
of securities such as the Convertible Notes (including
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<PAGE> 54
principal and interest), is to credit and accounts of the relevant Participants
with the payment on the payment date, in amounts proportionate to their
respective holdings in principal amount of beneficial interests in the relevant
security as shown on the records of the Depositary (unless the Depositary has
reason to believe it will not receive payment on such payment date). Payments by
the Participants and the Indirect Participants to the beneficial owners of
Convertible Notes will be governed by standing instructions and customary
practices and will be the responsibility of Participants or the Indirect
Participants, and the beneficial owners and not the responsibility of the
Depositary, the Trustee or the Company. Neither the Company nor the Trustee will
be liable for any delay by the Depositary or any of its Participants in
identifying the beneficial owners of the Convertible Notes, and the Company and
the Trustee may conclusively rely on and will be protected in relying on
instructions from the Global Note Registered Owner for all purposes.
So long as the Depositary, or its nominee, is the registered owner or
holder of a Global Note, the Depositary or such nominee, as the case may be,
will be considered the sole owner or holder of the Convertible Notes represented
by such Global Note for all purposes under the Indenture and the Convertible
Notes. No beneficial owner of an interest in a Global Note will be able to
transfer the interest except in accordance with the Depositary's applicable
procedures, in addition to those provided for under the Indenture.
Transfers between Participants in the Depositary will be effected in the
ordinary way in accordance with the Depositary rules. If a holder requires
physical delivery of a certificated note for any reason, including to sell
Convertible Notes to persons in jurisdictions which require such delivery of
such Convertible Notes or to pledge such Convertible Notes, such holder must
transfer its interest in a Global Note in accordance with the normal procedures
of the Depositary and the procedures set forth in the Indenture.
The Company excepts that the Depositary will take any action permitted to
be taken by a holder of Convertible Notes (including the presentation of
Convertible Notes for exchange as described below) only at the direction of one
or more Participants to whose account the Depositary interests in a Global Note
is credited and only in respect of such portion of the aggregate principal
amount of the Convertible Notes as to which such Participant or Participants has
or have given such direction.
Although the Company expects that the Depositary will agree to the
foregoing procedures in order to facilitate transfers of interests in a Global
Note among participants of the Depositary, it is under no obligation to perform
or continue to perform such procedures, and such procedures may be discontinued
at any time. Neither the Company nor the Trustee will have any responsibility
for the performance by Depositary or its participants or indirect participants
of their respective obligations under the rules and procedures governing their
operations.
If the Depositary is at any time unwilling or unable to continue as a
depository for a Global Note and a successor depository is not appointed by the
Company within 90 days, the Company will issue definitive certificated
Convertible Notes in exchange for a Global Note.
Such definitive certificated Convertible Notes shall be registered in names
of the owners of the beneficial interests in the Global Note as provided by the
Participants. Convertible Notes issued in definitive certificated form will be
fully registered, without coupons, in minimum denominations of $1,000 and
integral multiples of $1,000 above that amount. Upon issuance of Convertible
Notes in definitive certificated form, the Trustee is required to register the
Convertible Notes in the name of, and cause the Convertible Notes to be
delivered to, the person or persons (or the nominees thereof) identified as the
beneficial owner as the Depositary shall direct.
Convertible Notes in definitive form will be issued upon the resale, pledge
or other transfer of Notes to any person or entity that does not participate in
the Depositary.
The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that the Company
believes to be reliable, but the Company takes not responsibility for the
accuracy thereof.
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REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The Company and the Initial Purchasers have entered into a Registration
Rights Agreement. Pursuant to the Registration Rights Agreement, the Company
agreed to file with the Commission within 90 days after the Closing Date a shelf
registration statement under the Securities Act (the "Shelf Registration
Statement") on Form S-3 or another appropriate form to cover resales of Transfer
Restricted Securities 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 all reasonable efforts to cause the
Shelf Registration Statement to be declared effective by the Commission on or
prior to 150 days after the Closing Date (the "Effectiveness Target Date") and
to keep the Shelf Registration Statement effective until the earlier of such
date that is two years after the latest date of initial issuance of the
Convertible Notes (or such earlier date when Holders of the Securities are able
to sell such Securities immediately without restriction pursuant to Rule 144(k)
under the Securities Act or any successor rule thereto or otherwise) or the date
all Transfer Restricted Securities covered by the Shelf Registration Statement
have been sold or there cease to be outstanding any Transfer Restricted
Securities. For purposes of the foregoing, "Transfer Restricted Securities"
means each Convertible Note and share of Common Stock issued upon conversion
thereof until the date on which such Convertible Note or share of Common Stock
has been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement or the date on which such
Convertible Note or share of Common Stock is distributed to the public pursuant
to Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k)
under the Securities Act (or any similar provisions then in force).
The Registration Rights Agreement provides that (i) the Company will file
the Shelf Registration Statement with the Commission on or prior to 90 days
after the Closing Date and (ii) the Company will use all reasonable efforts to
cause the Shelf Registration Statement to be declared effective by the
Commission on or prior to 150 days after the Effectiveness Target Date. If (i)
the Shelf Registration Statement is not filed with the Commission on or prior to
90 days after the Closing Date, (ii) the Shelf Registration Statement has not
been declared effective by the Commission within 150 days after the Closing Date
or (iii) the Shelf Registration Statement is filed and declared effective but
shall thereafter cease to be effective or this Prospectus ceases to be usable
for a period of time which shall exceed 90 days in the aggregate during any
365-day period (each such event referred to in clauses (i) through (iii). a
"Registration Default"), the Company will accrue liquidated damages ("Liquidated
Damages") to each Holder of Transfer Restricted Securities, during the first
90-day period immediately following the occurrence of such Registration Default
in an amount equal to $0.05 per week per $1,000 principal amount of Convertible
Notes and, if applicable, on an equivalent basis per share (subject to
adjustment in the event of stock splits, stock recombinations, stock dividends
and the like) of Common Stock constituting Transfer Restricted Securities held
by such Holder. The rate of accrual of the Liquidated Damages will increase by
an additional $0.05 per week per $1,000 principal amount of Convertible Notes,
if applicable, by an equivalent amount per week per share (subject to adjustment
as set forth above) of Common Stock constituting Transfer Restricted Securities
for each subsequent 90-day period until all Registration Defaults have been
cured, up to a maximum amount of Liquidated Damages with respect to any
Registration Default of $0.50 per week per $1,000 principal amount of
Convertible Notes or, if applicable, an equivalent amount per week per share
(subject to adjustment as set forth above) of Common Stock constituting Transfer
Restricted Securities. All accrued Liquidated Damages shall be paid to the
Holders of Convertible Notes or shares of Common Stock (as applicable) in the
same manner as interest payments on the Convertible Notes on semi-annual payment
dates which correspond to interest payment dates for the Convertible Notes.
Following the cure of a Registration Default, Liquidated Damages will cease to
accrue with respect to such Registration Default. The use of the Shelf
Registration Statement for effecting resales of Transfer Restricted Securities
may be suspended in certain circumstances described in the Registration Rights
Agreement upon notice by the Company to the holders of the Transfer Restricted
Securities, subject to the rights of the holders of Transfer Restricted
Securities to receive Liquidated Damages if the aggregate number of days of such
suspensions in any 365-day period exceeds the period described above.
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GOVERNING LAW
The Indenture and the Convertible Notes are governed in accordance with the
laws of the State of New York.
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 is 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 Senior Notes.
The Holders of a majority in principal amount of the then outstanding
Convertible 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 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 Convertible Notes, unless such Holder shall have
offered to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense.
CERTAIN DEFINITIONS
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
"Capital Stock" means all shares, interest, 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.
"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 Capital 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
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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.
"Junior Securities" means any Qualified Capital Stock and any Indebtedness
of the Company that is fully subordinated in right of payment to the Convertible
Notes and has no scheduled installment of principal due, by redemption, sinking
fund payment or otherwise, on or prior to the Stated Maturity of the Convertible
Notes.
"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
director 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.
"Senior Indebtedness" means all obligations of the Company to pay the
principal of, premium, if any, interest (including all interest accruing
subsequent to the commencement of any bankruptcy or similar proceeding, whether
or not a claim for post-petition interest is allowable as a claim in any such
proceeding) and rent payable on or in connection with, and all letters of
credit, reimbursement obligations and fees, costs, expenses and other amounts
accrued or due on or in connection with, any Indebtedness of the Company,
whether outstanding on the date of the Indenture or thereafter created,
incurred, assumed, guaranteed or in effect guaranteed by the Company, unless the
instrument creating or evidencing such Indebtedness provides that such
Indebtedness is not senior or superior in right of payment to the Convertible
Notes or is pari passu with, or subordinated to, the Convertible Notes; provided
that in no event shall Senior Indebtedness include (a) Indebtedness of the
Company owed or owing to any Subsidiary of the Company, (b) Indebtedness
representing or with respect to any account payable or other accrued current
liability or obligation incurred in the ordinary course of business in
connection with the obtaining of materials or services or (c) any liability for
taxes owed or owing by the Company or any Subsidiary of the Company.
"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.
"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.
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DESCRIPTION OF CAPITAL STOCK
AUTHORIZED CAPITAL STOCK
The authorized capital stock of the Company consists of 27,500,000 shares
of which 2,500,000 are shares of preferred stock, par value $0.01 per share (the
"Preferred Stock"), and 25,000,000 are shares of Common Stock. On May 11, 1998,
there were 16,573,757 shares of Common Stock outstanding. In addition, one
million shares of Series A Junior Participating Preferred Stock are designated
and reserved for issuance in connection with the Rights Agreement (as
hereinafter defined). For a description of the Rights Agreement and the Series A
Junior Participating Preferred Stock, see "Purposes And Effects Of Certain
Provisions Of the Restated Certificate And By-Laws And The Rights
Agreement -- Stockholder Rights Plan." The following description is qualified in
all respect by reference to the Restated Certificate of Incorporation and the
By-laws, copies of which will be available upon request.
COMMON STOCK
All shares of Common Stock participate equally in dividends payable to
holders of Common Stock when and as declared by the Board of Directors and in
net assets available for distribution to holders of Common Stock on liquidation
or dissolution, have one vote per share on all matters submitted to a vote of
the Company stockholders and do not have cumulative rights in the decision of
directors. All issued and outstanding shares of Common Stock are fully paid and
nonassessable, and the holders thereof do not have pre-emptive rights.
PREFERRED STOCK
The Board of Directors is authorized to provide for the issuance of shares
of Preferred Stock in one or more series, and to fix for each such series such
voting powers, full or limited, or no voting powers, and such designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as are stated in a
Certificate of Designation adopted by the Board of Directors providing for the
issue of such series and as are permitted by the Delaware General Corporation
Law (the "DGCL").
TRANSFER AGENT
Continental Stock Transfer & Trust Company is the transfer agent and
registrar for the Company's Common Stock.
CERTAIN SPECIAL PROVISIONS
Certain provisions contained in the Restated Certificate, the By-Laws and
the Rights Agreement, dated as of December 19, 1990, between the Company and
Continental Stock Transfer and Trust Company (the "Rights Agreement"), could
make the acquisition of control of the Company by means of a tender offer, open
market purchases, a proxy contest or otherwise more difficult. Set forth below
is a description of such provisions in the Restated Certificate, the By-laws and
the Rights Agreement. Such description is intended as a summary only and is
qualified in its entirety by reference to the Restated Certificate, By-laws and
the Rights Agreement, copies of which will be available upon request.
CLASSIFIED BOARD OF DIRECTORS
The Restated Certificate and the By-laws provide that the Board of
Directors will be divided into three classes of directors, with the classes to
be as nearly equal in number as possible. The Board of Directors consists of the
persons referred to in "Management -- Directors and Officers of the Company." At
each annual meeting of stockholders, one class of directors will be elected,
each year for a three-year term.
The Company believes that the classified board provision of the Restated
Certificate is advantageous to the Company and its stockholders because, by
providing that directors will serve three-year terms rather than one-year terms,
it will enhance the likelihood of continuity and stability in the composition of
the Board of
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Directors and in the policies formulated by the Board of Directors. The Company
believes that this, in turn, will permit the board to represent more effectively
the interests of all stockholders.
With a classified Board of Directors, it will generally take a majority
stockholder two annual meetings of stockholders to elect a majority of the Board
of Directors. As a result, a classified board may discourage proxy contests for
the election of directors or purchases of a substantial block of stock because
its provisions could operate to prevent obtaining control of the board in a
relatively short period of time. The classification provisions could also have
the effect of discouraging a third party from making a tender offer or otherwise
attempting to obtain control of the Company, even though such an attempt might
be beneficial to the Company and its stockholders. In addition, because under
the Restated Certificate directors may be removed only for cause, a classified
board would delay stockholders who do not agree with the policies of the Board
of Directors from replacing a majority of the Board of Directors for two years,
unless they can demonstrate the directors should be removed for cause and obtain
the requisite vote.
NUMBER OF DIRECTORS; REMOVAL; FILLING VACANCIES
The Restated Certificate and the By-laws provide that the number of
directors will be fixed from time to time exclusively by the Board of Directors,
but shall consist of not more than fifteen nor less than three directors. In
addition, the Restated Certificate and the By-laws provide that, subject to any
rights of holders of any shares of Preferred Stock, if any, a majority of the
Board of Directors then in office may fill any vacancies on the Board of
Directors. Accordingly, the Board of Directors could temporarily prevent any
stockholder from obtaining majority representation on the board by enlarging the
size of the board and filling the new directorships with its own nominees.
Under the DGCL and the Restated Certificate, a director serving on a
classified board may be removed by the stockholders only for cause. Moreover,
the Restated Certificate provides that directors may be removed only by the
affirmative vote of holders of a least a majority of the voting power of all the
then outstanding shares of stock entitled to vote generally in the election of
directors (the "Voting Stock"), voting together as a single class.
NO STOCKHOLDER ACTION BY WRITTEN CONSENT SPECIAL MEETINGS
The Restated Certificate provides that stockholder action can be taken only
at an annual or special meeting of stockholders and prohibits stockholder action
by written consent in lieu of a meeting. The Restated Certificate and the Bylaws
provide that, subject to the rights of holders of any series of Preferred Stock,
special meetings of stockholders can be called only by the Board of Directors,
the Chairman of the Board of Directors or the President. Stockholders are not
permitted to call a special meeting or to require that the Board of Directors
call a special meeting of stockholders. Moreover, the business permitted to be
conducted at any special meeting of stockholders is limited to the purpose or
purposes specified in the written notice of such meeting.
The provisions of the Restated Certificate prohibiting stockholder action
by written consent may have the effect of delaying consideration of a
stockholder proposal until the next annual meeting unless a special meeting is
called by the Board of Directors, the Chairman of the Board of Directors or the
President. These provisions would also prevent the holders of a majority of the
voting power of the Voting Stock from using the written consent procedure to
take stockholder action and from taking action by consent without giving all the
stockholders of the Company entitled to vote on a proposed action the
opportunity to participate in determining such proposed action. Moreover, a
stockholder could not force stockholder consideration of a proposal over the
opposition of the Board of Directors, the Chairman of the Board of Directors or
the President by calling a special meeting of stockholders prior to the time the
Board of Directors, the Chairman of the Board of Directors or the President
believes such consideration to be appropriate.
ADVANCE NOTICE PROVISIONS FOR STOCKHOLDER NOMINATIONS AND STOCKHOLDER PROPOSALS
The By-laws establish an advance notice procedure with regard to the
nomination, other than by or at the direction of the Board of Directors, of
candidates for election as directors (the "Nomination Procedure") and
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with regard to business to be brought before an annual or special meeting of
stockholders of the Company (the "Business Procedure").
The Nomination Procedure provides that, subject to the rights of holders of
any series of Preferred Stock, if any, only persons who are nominated by, or at
the direction of, the Board of Directors or by a stockholder who has given
timely written notice to the Secretary prior to the meeting at which directors
are to be elected, will be eligible for election as directors of the Company.
The Business Procedure provides that at an annual or special meeting only such
business may be conducted as has been specified in the notice of meeting,
brought before the meeting by or at the direction of the Board of Directors or
by a stockholder who has given timely written notice to the Secretary of such
stockholder's intention to bring such business before the meeting. Under the
Nomination Procedure or the Business Procedure, to be timely, notice must be
received by the Company not less than 75 days nor more than 90 days prior to the
annual or special meeting of stockholders, provided, however, that in the event
that less than 90 days' notice or prior public disclosure of the meeting date is
given or made to stockholders, notice by the stockholder to be timely must be
received not later than the fifteenth day following the day on which such notice
of the date of the meeting was mailed or such public disclosure was made,
whichever first occurs.
Under the Nomination Procedure, a stockholder's notice to the Company
proposing to nominate a person for election as a director must contain certain
information (i) about each proposed nominee, including, without limitation, (a)
the name, age, business address and residence address of the nominee, (b) the
principal occupation or employment of the nominee, (c) the class, series and
number of shares of capital stock of the Company which are beneficially owned by
the nominee, and (d) any other information relating to the nominee that is
required to be disclosed in solicitations of proxies for election of directors
pursuant to the Rules and Regulations of the Commission under the Exchange Act
(including such person's written consent to being named in the proxy statement
as a nominee and to serving as director if elected) and (ii) about the
stockholder proposing to nominate such person, including, without limitation,
the name and record address of the stockholder and the class, series and number
of shares of capital stock of the Company which are beneficially owned by the
stockholder. The Company may require any proposed nominee to furnish such other
information as may reasonably be required by the Company to determine the
eligibility of such proposed nominee to serve as a director of the Company.
Under the Business Procedure, a stockholder's notice relating to the conduct of
business other than the nomination of directors at an annual meeting must
contain certain information about such business and about the proposing
stockholder including, without limitation, a brief description of the business
desired to be brought before the meeting, the name and record address of the
proposing stockholder, the class, series and number of shares of capital stock
of the Company owned by the proposing stockholder and a description of any
material interest of the stockholder in such business. If the officer presiding
at a meeting determines that a person was not nominated in accordance with the
Nomination Procedure, such person will not be eligible for election as a
director and such nomination shall be disregarded. If such presiding officer
determines that business was not properly brought before such meeting in
accordance with the Business Procedure, such business will not be transacted at
such meeting.
By requiring advance notice of nominations by stockholders, the Nomination
Procedure will afford the Board of Directors a meaningful opportunity to
consider the qualifications of the proposed nominees and, to the extent deemed
necessary or desirable by the Board of Directors, to inform stockholders about
such qualification. By requiring advance notice of proposed business, the
Business Procedure will provide a more orderly procedure for conducting annual
meetings of stockholders and, to the extent deemed necessary or desirable by the
Board of Directors, will provide the Board of Directors with a meaningful
opportunity to inform stockholders, prior to such meetings, of any business
proposed to be conducted at such meetings, together with any recommendation of
the Board of Directors' position as to action to be taken with respect to such
business, so as to enable stockholders better to determine whether they desire
to attend such a meeting or grant a proxy to the Board of Directors as to the
disposition of any such business. Although the Restated Certificate and the
By-laws do not give the Board of Directors any power to approve or disapprove
stockholder nominations for the election of directors or proposals for action,
they may have the effect of precluding a contest for the election of directors
or the consideration of stockholder proposals if the proper procedures are not
followed, and of discouraging or deterring a third party from conducting a
solicitation of procedures to
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elect its own slate of directors or to approve its proposal without regard to
whether consideration of such nominees or proposals might be harmful or
beneficial to the Company and its stockholders.
PREFERRED STOCK
The Restated Certificate authorizes the Board of Directors to issue one or
more series of Preferred Stock and to determine, with respect to any series of
Preferred Stock, the powers, designations, preferences, optional or other
rights, if any, and the qualifications, limitations or restrictions thereof.
The Company believes that the ability of the Board of Directors to issue
one or more series of Preferred Stock will provide increased flexibility in
structuring possible future financings and acquisitions, and in meeting other
corporate needs which might arise. The authorized shares of Preferred Stock, as
well as shares of the Common Stock, will be available for issuance without
further action by the Company's stockholders, unless such action is required by
applicable law or the rules of any stock exchange on which the Company's
securities may be listed or applicable rules of any self-regulatory
organization. If the approval of the Company's stockholders is not required for
the issuance of shares of Preferred Stock or the Company Common Stock, the Board
of Directors does not intend to seek stockholder approval. The Board of
Directors will make any determination to issue such shares based on its judgment
as to the best interests of the Company and its stockholders. The Board of
Directors, in so acting, could issue Preferred Stock having terms that could
discourage an acquisition attempt or other transaction that some or a majority
of the stockholders might believe to be in their best interests or in which
stockholders might receive a premium for their stock over the then current
market price of such stock. Although the Company has no present plan to issue
any shares of the Series A Junior Preferred Stock, one million shares of Series
A Junior Preferred Stock have been designated and reserved for issuance pursuant
to the Rights Agreement.
AMENDMENT OF CERTAIN CHARTER AND BY-LAW PROVISIONS
Under the DGCL, the stockholders have the right to adopt, amend or repeal
the By-laws of a corporation. In addition, if the certificate of incorporation
so provides, the By-laws may be amended by the board of directors. The By-laws
provide that they may be amended by the Board of Directors or stockholders,
provided that if the amendment is to be adopted by the stockholders, the
affirmative vote of the holders of at least 66 2/3% of the Voting Stock, voting
together as a single class, is required. Similarly, provisions set forth in the
Restated Certificate relating to the election and term of directors, the
prohibition of stockholder action without a meeting, calling a stockholders'
meeting, the elimination of personal liability of directors and the amendment of
the By-laws may be amended only by the affirmative vote of the holders of at
least 66 2/3% of the Voting Stock, voting together as a single class.
ANTI-TAKEOVER STATUTE
Section 203 of the DGCL prohibits certain transactions between a Delaware
corporation and an "interested stockholder," which is defined therein as a
person who, together with any affiliates and/or associates of such person,
beneficially owns, directly or indirectly, 15% or more of the outstanding voting
shares of a Delaware corporation. This provision prohibits certain business
combinations (defined broadly to include mergers, consolidations, sales or other
dispositions of assets having an aggregate value in excess of 10% of the
consolidated assets of the corporation, and certain transactions that would
increase the interested stockholder's proportionate share ownership in the
corporation) between an interested stockholder and a corporation for a period of
three years after the date the interested stockholder acquired its stock unless
(i) the business combination is approved by the corporation's Board of Directors
prior to the date the interested stockholder acquired shares, (ii) the
interested stockholder acquired at least 85% of the voting stock of the
corporation in the transaction in which it becomes an interested stockholder or
(iii) the business combination is approved by a majority of the Board of
Directors and by the affirmative vote of 66 2/3% of the votes entitled to be
cast by disinterested stockholders at an annual or special meeting. The Restated
Certificate and By-laws do not exclude the Company from the restrictions imposed
under Section 203 of the DGCL.
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STOCKHOLDER RIGHTS PLAN
The following description of the Rights Agreement is qualified in its
entirety by reference to the Rights Agreement, copies of which are available
upon request.
At a meeting held on November 8, 1990, the Board of Directors adopted the
Rights Agreement. The Rights Agreement provides that one Right will be issued
with each share of the Common Stock issued (whether originally issued or from
the Company's treasury) on or after the date of the Distribution and prior to
the Rights Distribution Date (as hereinafter defined). The Rights are not
exercisable until the Rights Distribution Date and will expire at the close of
business on July 31, 2001, unless previously redeemed by the Company as
described below. When exercisable, each Right entities the owner to purchase
from the Company one one-hundredth of a share of Series A Junior Participating
Preferred Stock at a purchase price of $59.
Except as described below, the Rights will be evidenced by all the Common
Stock certificates and will be transferred with the Common Stock certificates,
and no separate Rights certificates will be distributed. The Rights will
separate from the Common Stock and a "Rights Distribution Date" will occur upon
the earlier of (i) 10 days following a public announcement that a person or
group of affiliated or associated persons (an "Acquiring Person") has acquired,
or obtained the right to acquire, beneficial ownership of 15% or more of the
outstanding shares of the Common Stock (the "Stock Acquisition Date") or (ii) 10
business days (or such later date as is determined by the Company's Board of
Directors) following the commencement of a tender offer or exchange offer that
would result in a person or group becoming an Acquiring Person.
After the Rights Distribution Date, Rights certificates will be mailed to
holders of record of the Common Stock as of the Rights Distribution Date and,
thereafter the separate Rights certificates alone will represent the Rights.
The Series A Junior Participating Preferred Stock issuable upon exercise of
the Rights will be entitled to a minimum preferential quarterly dividend payment
of $0.01 per share and will be entitled to an aggregate dividend of 100 times
the dividend, if any, declared per share of Common Stock. In the event of
liquidation, the holders of the Series A Junior Participating Preferred Stock
will be entitled to a minimum preferential liquidation payment of $1 per share
and will be entitled to an aggregate payment of 100 times the payment made per
share of the Common Stock. Each share of Series A Junior Participating Preferred
Stock will have 100 votes and will vote together with the Common Stock. In the
event of any merger, consolidation or other transaction in which shares of the
Common Stock are changed or exchanged, each share of Series A Junior
Participating Preferred Stock will be entitled to receive 100 times the amount
received per share of the Common Stock. These rights are protected by customary
antidilution provisions. Because of the nature of the Series A Junior
Participating Preferred Stock's dividend, liquidation and voting rights, the
value of one one-hundredth of a share of Series A Junior Participating Preferred
Stock purchasable upon exercise of each Right should approximate the value of
one share of the Common Stock.
In the event that a person becomes an Acquiring Person, each holder of a
Right will thereafter have the right to receive, upon the exercise thereof at
the then current exercise price, the Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a value equal to two
times the exercise price of the Right. Notwithstanding any of the foregoing,
following the occurrence of any such event, all Rights that are, or (under
certain circumstances specified in the Rights Agreement) were beneficially owned
by any Acquiring Person (or certain related parties) will be null and void.
However, Rights are not exercisable following the occurrence of the event set
forth above until such time as the Rights are no longer redeemable by the
Company as set forth below.
In the event that, at any time following the Stock Acquisition Date, (i)
the Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving corporation or the Common Stock is
changed or exchanged (other than a merger which follows a Qualifying Offer and
satisfies certain other requirements) or (ii) 50% or more of the Company's
assets or earning power is sold or transferred, each holder of a Right (except
Rights which previously have been voided as set forth above) shall thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price, Common Stock of the acquiring company having a value equal to
two times the exercise price of the Right.
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<PAGE> 63
At any time prior to the earlier of (i) until 10 days following the Stock
Acquisition Date, or (ii) the Final Expiration Date, the Company may redeem the
Rights in whole, but not in part, at a price of $.01 per Right. Immediately upon
the action of the Board of Directors ordering redemption of the Rights, the
Rights will terminate and the only right of the holders of the Rights will be to
receive the $.01 redemption price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for the Common Stock (or other consideration) or for Common Stock of
the acquiring company as set forth above.
Other than those provisions relating to the principal economic terms of the
Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors prior to the Rights Distribution Date. After the Rights
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board of Directors in order to cure any ambiguity, to make changes which do not
adversely affect the interests of holders of Rights (excluding the interests of
any Acquiring Person) or to shorten or lengthen any time period under the Rights
Agreement, provided that no amendment to adjust the time period governing
redemption shall be made at such time as the Rights are not redeemable.
The Rights have certain anti-takeover effects as they will cause
substantial dilution to a person or group that acquires a substantial interest
in the Company without the prior approval of the Board of Directors. Among the
effects is that the Rights could discourage a takeover attempt that might
otherwise allow the holders of Common Stock to sell such Common Stock at a
premium to the then current market price or which might otherwise be beneficial
to stockholders.
LIMITATION OF LIABILITY OF DIRECTORS
The Restated Certificate provides that 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 174 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 provide 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.
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<PAGE> 64
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.
Except as described under "Business -- Litigation," there has not been in
the past and there is not presently pending any litigation or proceeding
involving a director, officer, employee or agent of the Company which could give
rise to an indemnification obligation on the part of the Company. In addition,
except as described herein, the Board of Directors is not aware of any
threatened litigation or proceeding which may result in a claim for
indemnification.
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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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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a discussion of certain anticipated U.S. federal income
tax consequences of the purchase, ownership and disposition of the Convertible
Notes as of the date hereof. It deals only with Convertible Notes held as
capital assets, and does not deal with special situations, such as those of
dealers in securities, financial institutions, insurance companies and 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. As used herein, the term "U.S. Holder" means a beneficial
owner of a Convertible Note (or Common Stock of the Company acquired upon
conversion of a Convertible Note) that is for United States federal income tax
purposes (i) a citizen or resident of the United States, (ii) a corporation
created or organized under the laws of the United States or of any political
subdivision thereof, or (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 United States federal income taxation on a net income
basis. As used herein, the term "Non-U.S. Holder" means a beneficial owner of a
Convertible Note (or Common Stock of the Company acquired upon conversion of a
Convertible Note) that is not a U.S. Holder. PROSPECTIVE INVESTORS ARE URGED TO
CONSULT THEIR TAX ADVISORS REGARDING THE PARTICULAR TAX CONSEQUENCES OF
PURCHASING, HOLDING AND DISPOSING OF THE CONVERTIBLE NOTES OR COMMON STOCK OF
THE COMPANY THAT MAY BE SPECIFIC TO THEM, INCLUDING THE TAX CONSEQUENCES ARISING
UNDER ANY STATE, LOCAL OR FOREIGN LAWS.
U.S. HOLDERS
Interest. A holder of a Convertible Note will recognize interest income
thereon in accordance with his method of accounting for federal income tax
purposes.
Premium. If a holder purchases a Convertible Note for an amount that is
greater than such Convertible Note's principal amount, such holder will be
considered to have purchased such Convertible Note with "amortizable bond
premium" equal in amount to such excess. A holder may elect to amortize such
premium, using a constant yield method, over the remaining term of such
Convertible Note with reference to either the amount payable on maturity or, if
it results in a smaller premium attributable to the period through the earlier
call date, with reference to the amount payable on the earlier call date. An
election to amortize bond premium applies to all taxable debt obligations then
owned and thereafter acquired by the holder and may be revoked only with the
consent of the Internal Revenue Service ("IRS").
Market Discount. If a holder purchases a Convertible Note for an amount
that is less than its principal amount, by at least .025% of its principal
amount times the number of remaining whole years to maturity, then such holder
will be considered to have purchased such Convertible Note with "market
discount" equal in amount to such difference between the principal amount and
purchase price. In that event, gain realized by the holder upon the sale,
retirement or certain other dispositions of the Convertible Note will be treated
as ordinary interest income to the extent of the accrued market discount. Market
discount on a Convertible Note will be treated as accruing ratably over such
Note's term, or, at the holder's election, under a constant yield method. In
addition, such holder will be required to defer the deduction of a portion of
the interest paid on any indebtedness incurred or continued to purchase or carry
the Convertible Note (unless such holder elects to include market discount in
income currently as it accrues, on either a ratable or constant yield basis).
Such election, once made, applies to all market discount bonds acquired by the
taxpayer on or after the first day of the taxable year in which such election
applies, and may not be revoked without the consent of the IRS.
Conversion. A U.S. Holder generally will not recognize gain or loss upon
conversion of the Convertible Notes solely into Common Stock of the
Company(except with respect to cash received in lieu of fractional shares, or
any amounts attributable to accrued and unpaid interest on the Convertible
Notes, which will be treated as interest for federal income tax purposes). The
U.S. Holder's basis in the Common Stock received on conversion will be the same
as the U.S. Holder's adjusted tax basis in the Convertible Notes at the time of
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conversion, and the holding period for the Common Stock received on conversion
will include the holding period of the Convertible Notes that were converted.
Disposition of Convertible Notes. A U.S. Holder will recognize gain or
loss upon the sale, redemption or other taxable disposition of the Convertible
Notes in an amount equal to the difference between the U.S. Holder's adjusted
tax basis in the Convertible Note and the amount received therefor (other than
amounts attributable to accrued and unpaid interest on the Convertible Notes,
which will be treated as interest for federal income tax purposes or as
otherwise described under "Market Discount" above). A holder's adjusted basis in
a Convertible Note will generally be the cost of such Note, increased by the
accrual, if any, of market discount the holder has previously included in
income, and decreased by the amount of any deductions for amortizable bond
premium. 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 Convertible Note has been
held for more than 12 months but not more than 18 months at the time of the
sale, exchange, retirement or other disposition, and a maximum 20% rate if the
Convertible Notes were held for more than 18 months at such time.
Adjustments to Conversion Ratio. The Conversion Price of the Convertible
Notes is subject to adjustment under certain circumstances. Under Section 305 of
the Code and the Treasury Regulations issued thereunder, adjustments or the
failure to make such adjustments to the Conversion Price of the Convertible
Notes may result in a taxable constructive distribution to the U.S. Holders of
Convertible Notes, resulting in ordinary dividend income to the extent of the
Company's current and accumulated earnings and profits if, and to the extent
that, certain adjustments in the Conversion Price (particularly an adjustment to
reflect a taxable dividend to holders of Common Stock of the Company) increase
the proportionate interest of a U.S. Holder of a Convertible Note convertible
into fully diluted Common Stock.
NON-U.S. HOLDERS
Under present United States federal income and estate tax law, assuming
certain certification requirements are met (which include identification of the
beneficial owner of a Convertible Note), and subject to the discussion of backup
withholding below:
(a) Payments of interest on a Convertible Note to any Non-U.S. Holder
will generally not be subject to United States 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, (iii) a bank receiving interest pursuant to a loan agreement
entered into in the ordinary course of its trade or business or (iv) a
foreign tax-exempt organization or a foreign private foundation for United
States federal income tax purposes, (2) such interest payments are not
effectively connected with the conduct of a trade or business within the
United States by the Non-U.S. Holder ("Effectively Connected") and (3) the
Company or its paying agent receives (i) from the 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 holder is a NonU.S. Holder, or (ii) from a security clearing
organization, bank or other financial institution that holds the
Convertible Notes in the ordinary course of its trade or business (a
"financial institution") on behalf of the 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 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.
(b) A Non-U.S. Holder will generally not be subject to United States
federal income tax on gain recognized on a sale, redemption or other
disposition of a Convertible Note or Common Stock (including the receipt of
cash in lieu of fractional shares upon conversion of a Convertible Note
into Common Stock) unless (1) the gain is Effectively Connected, (2) 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 disposition and certain other
requirements are met, (3) the Non-U.S. Holder is subject to tax pursuant to
the provisions of U.S. tax
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law applicable to certain U.S. expatriates, or (4) the Company was, is or
becomes a "United States real property holding corporation" for United
States federal income tax purposes and certain other requirements are met.
(c) Convertible Notes held (or treated as held) by an individual 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 the Company, and (ii) income on
the Convertible Note was not Effectively Connected.
(d) A Non-U.S. Holder will generally not be subject to United States
federal income tax on the conversion of a Convertible Note solely into
Common Stock of the Company (except as described in clause (b) above with
respect to the receipt of cash in lieu of fractional shares by certain
holders upon conversion of a Convertible Note, or as described in clause
(a) above with respect to any amounts attributable to accrued and unpaid
interest on the Convertible Notes).
(e) Dividends paid on Common Stock of the Company to a Non-U.S.
Holder will generally be subject to withholding of United States federal
income tax at the rate of 30% (or a lower rate prescribed by an applicable
treaty), unless such dividends are Effectively Connected.
(f) Common Stock of the Company owned by an individual who is neither
a citizen nor a resident (as defined for United States federal estate tax
purposes) of the United States at the date of death will generally be
included in such individual's estate for United States federal estate tax
purposes.
Income (including interest on a Convertible Note and dividends on Common
Stock of the Company as the case may be) and capital gain on the sale or other
taxable disposition of a Convertible Note or Common Stock that is Effectively
Connected will be subject to U.S. federal income tax at rates applicable to
United States persons generally (and, in the case of corporate holders, such
income and gain may also be subject to a 30% branch profits tax), which is
generally imposed on a foreign corporation on the repatriation from the United
States of earnings and profits that are Effectively Connected. If payments are
subject to U.S. federal income tax 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.
An applicable income tax treaty may, however, change these rules. A NonU.S.
Holder may be required to satisfy certain certification and other requirements
in order to claim treaty benefits or otherwise obtain any reduction of or
exemption from United States federal income or withholding tax under the
foregoing rules.
BACKUP WITHHOLDING AND INFORMATION REPORTING
The Company or its designated paying agent (the "payor") will, where
required, report to holders of Convertible Notes (or Common Stock) and the
Internal Revenue Service the amount of any interest paid on the Convertible
Notes (or dividends paid with respect to the Common Stock or other reportable
payments) in each calendar year and the amount of tax, if any, withheld with
respect to such payments. The information may also be made available to the tax
authorities of the country in which a Non-U.S. Holder resides.
Under current United States federal income tax law, a 31% backup
withholding tax is required with respect to certain interest, dividends and
principal payments made to, and to the proceeds of sales before maturity by,
certain U.S. Holders if such persons fail to furnish their taxpayer
identification numbers and other information.
Interest payments on a Convertible Note to a Non-U.S. Holder will not be
subject to information reporting requirements and backup withholding tax if
either the requisite certification, as described above, has been received or an
exemption has otherwise been established, provided that neither the Company nor
the payor does not have actual knowledge that the holder is a U.S. Holder or
that the conditions of any other exemption are not in fact satisfied.
Payment by or through a United States office of any broker, U.S. or
foreign, of the proceeds on disposition of a Convertible Note or Common Stock
will be subject to both backup withholding tax and
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information reporting requirements, unless the Non-U.S. Holder certifies under
penalties of perjury as to its name, address and status as a Non-U.S. Holder or
otherwise establishes an exemption (provided that neither the Company nor the
payor has actual knowledge that the holder is a U.S. holder or that the
conditions of any other exemption are not, in fact, satisfied). Information
reporting requirements (but not backup withholding tax) will also apply to a
payment of the proceeds on disposition of a Convertible Note or Common Stock by
or through a foreign office of a United States broker, or foreign brokers with
certain relationships to the United States, unless the broker has documentary
evidence in its records that the holder is a Non-U.S. Holder and certain other
conditions are met or the holder otherwise establishes an exemption.
Information reporting requirements and backup withholding tax will
generally not apply to dividends paid on Common Stock of the Company to a
Non-U.S. Holder at an address outside the United States (the "Address Rule"),
unless the payor has knowledge that the holder is a U.S. Holder. Dividends paid
to a Non-U.S. Holder at an address within the United States may be subject to
backup withholding tax if the Non-U.S. Holder fails to establish that it is
entitled to an exemption or to provide a correct taxpayer identification number
and other information to the payor.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules will be refunded or credited against the holder's
United States federal income tax liability, provided that the required
information is furnished to the Internal Revenue Service.
The Treasury Department recently promulgated final regulations regarding
the withholding and information reporting rules. The final regulations are
generally effective for payments made after December 31, 1999, subject to
certain transition rules. In general, the final regulations do not significantly
alter the substantive withholding and information requirements, but rather unify
current certification procedures and forms and clarify reliance standards. In
particular, the final regulations eliminate the Address Rule as a means of
exemption from reporting requirements. Non-U.S. Holders should consult with
their own tax advisors with respect to the impact, if any, of the final
regulations.
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 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 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
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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.
THE PRECEDING DISCUSSION OF CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY,
EACH INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR AS TO PARTICULAR TAX
CONSEQUENCES TO IT OF PURCHASING, HOLDING, AND DISPOSING OF THE CONVERTIBLE
NOTES AND THE COMMON STOCK OF THE COMPANY, INCLUDING THE APPLICABILITY AND
EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS, AND OF ANY PROPOSED CHANGES IN
APPLICABLE LAWS.
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SELLING HOLDERS
The Convertible Notes were originally issued by the Company and sold by the
Initial Purchasers in a transaction exempt from the registration requirements of
the Securities Act, to persons reasonably believed by such Initial Purchaser to
be "qualified institutional buyers" (as defined in Rule 144A under the
Securities Act) or in transactions complying with the provisions of Regulation S
under the Securities Act. The Selling Holders (which term includes their
transferees, pledgees, donees or their successors) may from time to time offer
and sell pursuant to this Prospectus any or all of the Convertible Notes and
Common Stock issued upon conversion of the Convertible Notes.
The following table sets forth information, as of May 12, 1998, unless
otherwise indicated, with respect to the Selling Holders and the respective
principal amounts of Convertible Notes beneficially owned by each Selling
Holders that may be offered pursuant to this Prospectus. Such information has
been obtained from the Selling Holders. None of the Selling Holders has, or
within the past three years has had, any position, office or other material
relationship with the Company or any of its predecessors or affiliates, except
as noted below. Because the Selling Holders may offer all or some portion of the
Convertible Notes or the Common Stock issuable upon conversion thereof pursuant
to this Prospectus, no estimate can be given as to the amount of the Convertible
Notes or the Common Stock issuable upon conversion thereof that will be held by
the Selling Holders upon termination of any such sales. In addition, the Selling
Holders identified below may have sold, transferred or otherwise disposed of all
or a portion of their Convertible Notes since May 12, 1998 in transactions
exempt from the registration requirements of the Securities Act.
<TABLE>
<CAPTION>
NUMBER OF UNITS TOTAL NUMBER OF
BEING REGISTERED UNITS BENEFICIALLY
NAME OF BENEFICIAL HOLDERS HEREBY OWNED
-------------------------- ---------------- ------------------
<C> <S> <C> <C>
1. KA Management Ltd. ......................... $ 7,436,973 $ 7,436,973
2. Fidelity Financial Trust: Fidelity
Convertible Securities Fund*................ 4,500,000 4,500,000
3. KA Trading LP............................... 3,663,027 3,663,027
4. Commonwealth Life Insurance Company......... 3,000,000 3,000,000
5. Eaton Vance Total Return Portfolio.......... 2,000,000 2,000,000
6. Donaldson, Lufkin & Jenrette Securities
Corp........................................ 1,760,000 1,760,000
7. Shepherd Investments International, Ltd. ... 1,750,000 1,750,000
8. Stark International......................... 1,750,000 1,750,000
9. Deutsche Bank A.G. London................... 1,500,000 1,500,000
10. TQA Vantage Fund, Ltd. ..................... 1,500,000 1,500,000
11. R(2) Investments, LDC....................... 1,500,000 1,500,000
12. Bank of America Pension Plan................ 1,500,000 1,500,000
13. TQA Leverage Fund, L.P...................... 800,000 800,000
14. Blue Cross Blue Shield of Michigan.......... 585,000 585,000
15. TQA Vantage Plus Fund, Ltd. ................ 500,000 500,000
16. Indiana University Foundation............... 350,000 350,000
17. California Healthcare Foundation............ 320,000 320,000
18. McMahan Securities Company, L.P............. 250,000 250,000
19. University of Washington Endowment Fund..... 200,000 200,000
20. Cogen Technologies Financial Partnership.... 185,000 185,000
21. East Bay Community Foundation............... 114,000 114,000
22. BTC Partners LLP............................ 85,000 85,000
23. Alsam Foundation............................ 70,000 70,000
24. MGBA Investments............................ 68,000 68,000
25. Caregroup Pension Plan...................... 23,000 23,000
26. Unidentified Selling Holders................ $50,840,000 $50,840,000
----------- -----------
Total....................................... $86,250,000 $86,250,000
=========== ===========
</TABLE>
- ---------------
* The entity is either an investment company or a portfolio of an investment
company registered under Section 8 of the Investment Company Act of 1940, as
amended, or a private investment account advised by Fidelity Management &
Research Company ("FMR Co."). FMR Co. is a Massachusetts corporation and an
investment advisor registered under Section 203 of the Investment Advisers
Act of 1940, as amended, and provides investment advisory services to each of
such Fidelity entities identified above, and to other registered investment
companies and to certain other funds which are generally offered to a limited
group of investors. FMR Co. is a wholly-owned subsidiary of FMR Corp.
("FMR"), a Massachusetts corporation. The holdings are as of May 6, 1998.
70
<PAGE> 72
PLAN OF DISTRIBUTION
The Convertible Notes and Common Stock offered hereby may be sold from time
to time to purchasers directly by the Selling Holders. Alternatively, the
Selling Holders may from time to time offer the Convertible Notes and Common
Stock to or through underwriters, broker/dealers or agents, who may receive
compensation in the form of underwriting discounts, concessions or commissions
from the Selling Holders or the purchasers of Convertible Notes and Common Stock
for whom they may act as agents. The Selling Holders and any underwriters,
broker/dealers or agents, who may receive compensation in the form of
underwriting discounts, concessions or commissions from the Selling Holders or
the purchasers of Convertible Notes and Common Stock for whom they may act as
agents. The Selling Holders and any underwriters, broker/dealers or agents that
participate in the distribution of Convertible Notes and Common Stock may be
deemed to be "underwriters" within the meaning of the Securities Act and any
profit on the sale of Convertible Notes and Common Stock by them and any
discounts, commissions, concessions or other compensation received by any such
underwriter, broker/dealer or agent may be deemed to be underwriting discounts
and commissions under the Securities Act.
The Convertible Notes and Common Stock issuable upon conversion thereof may
be sold by the Selling Holder from time to time, in one or more transactions at
fixed prices, at prevailing market prices at the time of sale, at varying prices
determined at the time of sale or at negotiated prices. Such prices will be
determined by the Selling Holders. The sale of the Convertible Notes and the
Common Stock issuable upon conversion thereof may be effected in transactions
(which may involve crosses or block transactions) on any national securities
exchange or quotation service on which the Convertible Notes or the Common Stock
may be listed or quoted at the time of sale, (ii) in the over-the-counter
market, (iii) in transactions otherwise than on such exchanges or in the
over-the-counter market or (iv) through the writing of options. At the time a
particular offering of the Convertible Notes or the Common Stock is made, if
required, a prospectus supplement will be distributed which will set forth the
names of the Selling Holders, the aggregate amount and type of Convertible Notes
and Common Stock being offered, the number of such securities owned prior to and
after the completion of any such offering, and, to the extent required, the
terms of the offering, including the name or names of any underwriters,
broker/dealers or agents, any discounts, commissions and other terms
constituting compensation from the Selling Holders and any discounts,
commissions or concessions allowed or reallowed or paid to broker/dealers.
To comply with the securities laws of certain jurisdictions, if applicable,
the Convertible Notes and Common Stock will be offered or sold in such
jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain jurisdictions the Convertible Notes and Common Stock may
not be offered or sold unless they have been registered or qualified for sale in
such jurisdictions or any exemption from registration or qualification is
available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Convertible Notes or the shares of Common Stock
issuable upon conversion thereof may be limited in its ability to engage in
market activities with respect to such Convertible Notes or the shares of Common
Stock issuable upon conversion thereof. In addition and without limiting the
foregoing, each Selling Holder will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales of any of the Convertible Notes and
shares of Common Stock issuable upon conversion thereof by the Selling Holders.
All of the foregoing may affect the marketability of the Convertible Notes and
shares of Common Stock issuable upon conversion thereof.
All expenses of the registration of the Convertible Notes and Common Stock
pursuant to the Registration Rights Agreement will be paid by the Company,
including, without limitation, Commission filing fees and expenses of compliance
with state securities or "blue sky" laws; provided, however, that the Selling
Holders will pay all underwriting discounts and selling commissions, if any. The
Selling Holders will be indemnified by the Company against certain civil
liabilities, including certain liabilities under the Securities Act, or will be
entitled to contribution in connection therewith. The Company will be
indemnified by the Selling Holders against certain civil liabilities, including
certain liabilities under the Securities Act, or will be entitled to
contribution in connection therewith.
71
<PAGE> 73
LEGAL MATTERS
Certain legal matters regarding the securities 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.
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.
72
<PAGE> 74
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.
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.
A-1
<PAGE> 75
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> 76
======================================================
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT 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 THE CONVERTIBLE NOTES OFFERED HEREBY, NOR DOES IT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE CONVERTIBLE
NOTES TO ANYONE OR BY ANYONE IN ANY JURISDICTION WHERE, 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 AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR 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..................... 4
Risk Factors........................... 9
Concurrent Offering.................... 17
Use of Proceeds........................ 17
Price Range of Common Stock............ 17
Dividend Policy........................ 18
Exchange Rates......................... 19
Capitalization......................... 20
Selected Consolidated Financial Data... 21
Business............................... 23
Management............................. 38
Security Ownership of Principal
Stockholders and Management.......... 40
Description of Securities.............. 42
Description of Capital Stock........... 57
Description of Certain Indebtedness.... 64
Certain United States Federal Income
Tax Considerations................... 65
Selling Holders........................ 70
Plan of Distribution................... 70
Legal Matters.......................... 72
Experts................................ 72
Cellular Telephone Glossary Terms...... A-1
</TABLE>
======================================================
======================================================
$86,250,000
[LOGO OF CELLULAR COMMUNICATIONS INTERNATIONAL, INC.]
6% CONVERTIBLE SUBORDINATED
NOTES DUE 2005
---------------------------
PROSPECTUS
---------------------------
, 1998
======================================================
<PAGE> 77
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> 78
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
- ----------- -----------
<C> <S>
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
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 Specimen of Common Stock Certificate (Incorporated by
reference to Exhibit 4.1, 1991 Form 10-K, File No. 0-19363).
4.2 Rights Agreement, dated as of December 19, 1990, between
CCII and Continental Stock Transfer Trust Company as the
Rights Agent (Incorporated by reference to Exhibit 4.2, File
No. 33-38398).
4.3 Warrant, dated July 25, 1994, between CCII and Cellular
Communications, Inc. (Incorporated by reference to Exhibit
4.3, 1994 Form 10-K, File No. 0-19363).
4.4 Indenture, dated as of March 18, 1998, between the Company
and the Chase Manhattan Bank, as Trustee.***
4.5 Registration Rights Agreement, dated March 18, 1998, between
the Company and Donaldson, Lufkin & Jenrette Securities
Corporation and Wasserstein Perella Securities Inc.**
4.6 Form of 6% Convertible Subordinated Note due 2005 (included
in Exhibit 4.4).**
4.7 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).
4.8 First Supplemental Indenture, dated as of February 23, 1998,
to Indenture dated as of August 22, 1995. (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 10.2, 1997 Form 10-K, File No. 019363).
</TABLE>
II-2
<PAGE> 79
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
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 page II-5 hereof).
25 Form T-1 Statement of Eligibility of The Chase Manhattan
Bank, Trustee.**
</TABLE>
- ---------------
* previously filed
** filed herewith
*** amended and refiled
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
II-3
<PAGE> 80
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-4
<PAGE> 81
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-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW YORK, ON MAY 12, 1998.
CELLULAR COMMUNICATIONS INTERNATIONAL,
INC.
/s/ WILLIAM GINSBERG
By:
--------------------------------------
William B. Ginsberg
Chairman of the Board, President
and Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES CAPACITY DATE
---------- -------- ----
<C> <S> <C>
/s/ WILLIAM GINSBERG Chairman of the Board, President and May 12, 1998
- --------------------------------------------- Chief Executive Officer
William B. Ginsberg (Principal Executive Officer)
* Vice President and Chief Financial May 12, 1998
- --------------------------------------------- Officer (Principal Financial Officer)
Stanton N. Williams
* Vice President -- Controller May 12, 1998
- --------------------------------------------- (Principal Accounting Officer)
Gregg Gorelick
* Executive Vice President, May 12, 1998
- --------------------------------------------- Chief Operating Officer and Director
J. Barclay Knapp
* Director May 12, 1998
- ---------------------------------------------
Sidney R. Knafel
* Director May 12, 1998
- ---------------------------------------------
Del Mintz
* Director May 12, 1998
- ---------------------------------------------
Alan J. Patricof
* Director May 12, 1998
- ---------------------------------------------
Warren Potash
*By: /s/ WILLIAM GINSBERG
------------------------------------
William B. Ginsberg
Attorney-in-fact
</TABLE>
II-5
<PAGE> 82
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------- ----------- ------
<C> <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
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 Specimen of Common Stock Certificate (Incorporated by
reference to Exhibit 4.1, 1991 Form 10-K, File No. 0-19363).
4.2 Rights Agreement, dated as of December 19, 1990, between
CCII and Continental Stock Transfer Trust Company as the
Rights Agent (Incorporated by reference to Exhibit 4.2, File
No. 33-38398).
4.3 Warrant, dated July 25, 1994, between CCII and Cellular
Communications, Inc. (Incorporated by reference to Exhibit
4.3, 1994 Form 10-K, File No. 0-19363).
4.4 Indenture, dated as of March 18, 1998 between the Company
and the Chase Manhattan Bank, as Trustee.***
4.5 Registration Rights Agreement, dated March 18, 1998, between
the Company and Donaldson, Lufkin & Jenrette Securities
Corporation and Wasserstein Perella Securities Inc.**
4.6 Form of 6% Convertible Subordinated Note due 2005 (included
in Exhibit 4.4).**
4.7 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).
4.8 First Supplemental Indenture, dated as of February 23, 1998,
to Indenture dated as of August 22, 1995 (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 10.2, 1997 Form 10-K, File No. 019363).
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 page II-5 hereof).
</TABLE>
<PAGE> 83
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------- ----------- ------
<C> <S> <C>
25 Form T-1 Statement of Eligibility of The Chase Manhattan
Bank, Trustee.**
</TABLE>
- ---------------
* previously filed
** filed herewith
*** amended and refiled
<PAGE> 1
Execution Copy
CELLULAR COMMUNICATIONS INTERNATIONAL, INC.
EURO 235,000,000 9-1/2% Series A Senior Discount Notes due 2005
$75,000,000 Principal Amount 6% Convertible Subordinated Notes due 2005
PURCHASE AGREEMENT
March 11, 1998
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL
WASSERSTEIN PERELLA SECURITIES, INC.
<PAGE> 2
EURO 235,000,000 9-1/2% Series A Senior Discount Notes due 2005
$75,000,000 Principal Amount 6% Convertible Subordinated Notes due 2005
of
CELLULAR COMMUNICATIONS INTERNATIONAL, INC.
PURCHASE AGREEMENT
March 11, 1998
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL
WASSERSTEIN PERELLA SECURITIES, INC.
c/o Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
Cellular Communications International, Inc., a Delaware corporation
(the "Company"), proposes to issue and sell (i) to Donaldson, Lufkin & Jenrette
Securities Corporation, Donaldson, Lufkin & Jenrette International and
Wasserstein Perella Securities, Inc. an aggregate of EURO 235,000,000 in
principal amount at maturity of its 9-1/2% Series A Senior Discount Notes due
2005 (the "Series A Discount Notes") to be issued pursuant to the provisions of
an indenture (the "Discount Indenture"), to be dated as of the Closing Date (as
defined below), between the Company and The Chase Manhattan Bank, as trustee
(the "Discount Trustee") and (ii) to Donaldson, Lufkin & Jenrette Securities
Corporation and Wasserstein Perella Securities, Inc. an aggregate of $75,000,000
in principal amount of its 6% Convertible Subordinated Notes due 2005 (the "Firm
Notes") to be issued pursuant to the provisions of an indenture (the
"Convertible Indenture" and, together with the Discount Indenture, the
"Indentures"), to be dated as of the Closing Date, between the Company and The
Chase Manhattan Bank, as trustee (the "Convertible Trustee"), subject to the
terms and conditions set forth herein. The Company also proposes to issue and
sell to the Initial Purchasers not more than an additional $11,250,000 principal
amount of its 6% Convertible
1
<PAGE> 3
Subordinated Notes due 2005 (the "Additional Notes"), if requested by the
Initial Purchasers as provided in Section 2 hereof.
The Series A Discount Notes and the Series B Discount Notes (as
defined below) issuable in exchange therefor are collectively referred to herein
as the "Discount Notes." The Firm Notes and the Additional Notes are herein
collectively referred to as the "Convertible Notes" and the Convertible Notes
and the Discount Notes are herein collectively referred to as the "Notes."
Pursuant to the terms of the Convertible Indenture, the Convertible Notes will
be convertible at the option of the holders thereof into shares of the Company's
common stock, par value $.01 per share (the "Common Stock"). The Convertible
Notes and the Common Stock issuable upon conversion of the Convertible Notes are
herein collectively referred to as the "Convertible Securities." The Notes and
the Common Stock issuable upon conversion of the Convertible Notes are herein
collectively referred to as the "Securities". With respect to the Discount
Notes, references to the "Initial Purchasers" shall mean Donaldson, Lufkin &
Jenrette Securities Corporation, Donaldson, Lufkin & Jenrette International and
Wasserstein Perella Securities, Inc. and with respect to the Convertible Notes,
references to the "Initial Purchasers" shall mean Donaldson, Lufkin & Jenrette
Securities Corporation and Wasserstein Perella Securities, Inc.
1. Offering Memoranda. The Series A Discount Notes and the
Convertible Notes will be offered and sold to the Initial Purchasers pursuant to
one or more exemptions from the registration requirements under the Securities
Act of 1933, as amended (the "Act"). The Company has prepared a preliminary
offering memorandum relating to each of the Series A Discount Notes and the
Convertible Notes, each dated February 24, 1998 (the "Preliminary Offering
Memoranda") and a final offering memorandum relating to each of the Series A
Discount Notes and the Convertible Notes, each dated March 11, 1998 (the
"Offering Memoranda").
Upon original issuance thereof, and until such time as the same is
no longer required pursuant to the Discount Indenture and the Convertible
Indenture (together, the "Indentures"), the Series A Discount Notes (and all
securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) and the Convertible Notes shall bear the following legend:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A OR
REGULATION S THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY
AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE
RESOLD, PLEDGED OR
2
<PAGE> 4
OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE THE UNITED STATES TO A PERSON
WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 904 UNDER THE SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF THE SECURITIES
ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR") THAT, PRIOR TO SUCH TRANSFER,
FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND,
IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF
SECURITIES LESS THAN $100,000, AN OPINION OF COUNSEL THAT SUCH TRANSFER IS
IN COMPLIANCE WITH THE SECURITIES ACT OR (e) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE
COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE."
2. Agreements to Sell and Purchase. (a) On the basis of the
representations, warranties and covenants contained in this Agreement, and
subject to the terms and conditions contained herein, the Company agrees to
issue and sell to the Initial Purchasers, and each of the Initial Purchasers
agrees, severally and not jointly, to purchase from the Company, (i) an
aggregate principal amount of EURO 235,000,000 at maturity of Series A Discount
Notes set forth opposite its name as set forth on Schedule A hereto at a
purchase price equal to 60.581% of the principal amount at maturity thereof (the
"Discount Purchase Price") and (ii) the principal amount of Firm Notes set forth
opposite its name as set forth on Schedule A hereto at a purchase price equal to
96-3/4% of the principal amount thereof (the "Convertible Purchase Price" and,
together with the Discount Purchase Price, the "Purchase Price").
(b) On the basis of the representations and warranties
contained in this Agreement, and subject to its terms and conditions, (i) the
Company agrees to issue and sell the Additional Notes and (ii) the Initial
Purchasers shall have a right, but not the obligation, to purchase the
Additional Notes from the Company at the Convertible Purchase Price. Additional
Notes may be purchased solely for the purpose of covering over-allotments made
in connection with the Offering of the Firm Notes. The Initial Purchasers may
exercise their right to purchase Additional Notes in whole or in part from time
to
3
<PAGE> 5
time by giving written notice thereof to the Company at any time within 30 days
after the date of this Agreement. Donaldson, Lufkin & Jenrette Securities
Corporation shall give any such notice on behalf of the Initial Purchasers and
such notice shall specify the aggregate principal amount of Additional Notes to
be purchased pursuant to such exercise and the date for payment and delivery
thereof. The date specified in any such notice shall be a business day (i) no
earlier than the Closing Date (as hereinafter defined), (ii) no later than ten
business days after such notice has been given and (iii) no earlier than two
business days after such notice has been given. If any Additional Notes are to
be purchased, each Initial Purchaser, severally and not jointly, agrees to
purchase from the Company the principal amount of Additional Notes which bears
the same proportion to the total principal amount of Additional Notes to be
purchased from the Company as the principal amount of Firm Notes set forth
opposite the name of such Initial Purchaser in Schedule A bears to the total
principal amount of Firm Notes.
3. Terms of Offering. The Initial Purchasers have advised the
Company that the Initial Purchasers will make offers (the "Exempt Resales") of
the Series A Discount Notes and the Convertible Notes purchased hereunder on the
terms set forth in the Offering Memoranda, as amended or supplemented, solely to
(i) persons whom the Initial Purchasers reasonably believe to be "qualified
institutional buyers" as defined in Rule 144A under the Act ("QIBs") and (ii) in
connection with the Series A Discount Notes, to non-U.S. persons permitted to
purchase the Series A Discount Notes in offshore transactions in reliance upon
Regulation S under the Act (each, a "Regulation S Purchaser") (such persons
specified in clauses (i) and (ii) being referred to herein as the "Eligible
Purchasers"). The Initial Purchasers have advised the Company that the Initial
Purchasers will make offers pursuant to Regulation S only to QIBs. The Initial
Purchasers will offer the Series A Discount Notes and the Convertible Notes to
Eligible Purchasers initially at a price equal to 99-3/4% of the principal
amount at maturity, in the case of the Series A Discount Notes, and 99-3/4% of
the principal amount, in the case of the Convertible Discount Notes. Such prices
may be changed at any time without notice.
Holders (including subsequent transferees) of the Series A Discount
Notes and the Convertible Securities will have the registration rights set forth
in the Senior Discount Note Registration Rights Agreement and Convertible
Subordinated Note Registration Rights Agreement, as applicable, (collectively
the "Registration Rights Agreements" and, individually, the "Registration Rights
Agreement"), to be dated the Closing Date, in substantially the form of Exhibit
A-1 and A-2 hereto, for so long as the Series A Discount Notes and the
Convertible Securities constitute "Transfer Restricted Securities" (as defined
in the Registration Rights Agreements). Pursuant to the applicable Registration
Rights Agreement, the Company will agree to file with the Securities and
Exchange Commission (the "Commission") under the circumstances set forth
therein, (i) a registration statement under the Act (the "Exchange Offer
Registration Statement") relating to the Company's 9-1/2% Series B Senior
Discount Notes due 2005 (the "Series B Discount Notes "), to be offered in
exchange for the Series A Discount Notes (such offer to exchange being referred
to as the "Exchange Offer") and (ii) a shelf registration statement pursuant to
Rule 415 under the Act (the "Discount Shelf Registration Statement" and,
together with the Exchange Offer Registration Statement, the "Discount
Registration Statements") relating to the resale by certain holders of the
Series A Discount Notes and to use its best efforts to cause such Discount
Registration Statements to be declared and remain effective and usable for the
periods specified in the
4
<PAGE> 6
respective Registration Rights Agreement and to consummate the Exchange Offer.
In addition, pursuant to the Registration Rights Agreement, the Company will
agree to file with the Commission under the circumstances set forth therein a
shelf registration statement pursuant to Rule 415 under the Act (the
"Convertible Registration Statement" and, together with the Discount
Registration Statement, the "Registration Statements.") relating to the resale
by certain holders of the Convertible Securities and to use its best efforts to
cause such Registration Statements to be declared and remain effective and
usable for the periods specified in the respective Registration Rights
Agreement. This Agreement, the Indentures, the Notes, and the Registration
Rights Agreement are hereinafter sometimes referred to collectively as the
"Operative Documents."
4. Delivery and Payment.
(a) Delivery to the Initial Purchasers of, and payment of the
Purchase Price for, the Series A Discount Notes and the Firm Notes shall be made
at the offices of Latham & Watkins or such other location as may be mutually
acceptable. Such delivery and payment shall be made at 9:00 a.m. New York City
time, on March 18, 1998 or at such other time on the same date or such other
date as shall be agreed upon by the Initial Purchasers and the Company in
writing. The time and date of such delivery and the payment for the Series A
Discount Notes and the Firm Notes are herein called the "Closing Date."
(b) Delivery to the Initial Purchasers of, and payment for,
any Additional Notes to be purchased by the Initial Purchasers shall be made at
the offices of Latham & Watkins at 9:00 a.m. New York City time, on the date
specified in the exercise notice given by the Initial Purchasers pursuant to
Section 2(b) hereof or such other time on the same or such other date as the
Initial Purchasers and the Company shall agree in writing. The time and date of
delivery and payment for any Additional Notes are hereinafter referred to as an
"Option Closing Date".
(c) One Series A Discount Note in definitive global form,
registered in the name of Chase Manhattan Bank London, as common depositary for
Euroclear System and Cedel Bank societe anonyme, having an aggregate principal
amount at maturity corresponding to the aggregate principal amount of the Series
A Discount Notes (the "Global Discount Note"), shall be delivered by the Company
to the Initial Purchasers (or as the Initial Purchasers direct) in each case
with any transfer taxes thereon duly paid by the Company against payment by the
Initial Purchasers of the Purchase Price thereof by wire transfer in same day
funds to the order of the Company. The Global Discount Note shall be made
available to the Initial Purchasers for inspection not later than 9:30 a.m., New
York City time, on the business day immediately preceding the Closing Date.
(d) One or more of the Convertible Notes in definitive global
form, registered in the name of Cede & Co., as nominee of the Depository Trust
Company ("DTC"), having an aggregate principal amount at maturity corresponding
to the aggregate principal amount of the Convertible Notes, as appropriate (the
"Global Convertible Note") and, together with the Global Discount Note, the
"Global Notes"), shall be delivered by the Company to the Initial Purchasers (or
as the Initial Purchasers direct) in each case with any transfer taxes thereon
duly paid by the Company against payment by the Initial
5
<PAGE> 7
Purchasers of the Purchase Price thereof by wire transfer in same day funds to
the order of the Company. The Global Notes shall be made available to the
Initial Purchasers for inspection not later than 9:3- a.m., New York City time,
on the business day immediately preceding the Closing Date.
5. Agreements of the Company. The Company hereby agrees with the
Initial Purchasers as follows:
(a) To advise the Initial Purchasers promptly and, if
requested by the Initial Purchasers, confirm such advice in writing, (i) of the
issuance by any state securities commission of any stop order suspending the
qualification or exemption from qualification of any Series A Discount Notes or
Convertible Notes for offering or sale in any jurisdiction designated by the
Initial Purchasers pursuant to Section 5(e) hereof, or the initiation of any
proceeding by any state securities commission or any other federal or state
regulatory authority for such purpose and (ii) of the happening of any event
during the period referred to in Section 5(c) below that makes any statement of
a material fact made in the Preliminary Offering Memoranda or the Offering
Memoranda untrue or that requires any additions to or changes in the Preliminary
Offering Memoranda or the Offering Memoranda in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Company shall use its best efforts to prevent the issuance of
any stop order or order suspending the qualification or exemption of any Series
A Discount Notes or Convertible Notes under any state securities or Blue Sky
laws and, if at any time any state securities commission or other federal or
state regulatory authority shall issue an order suspending the qualification or
exemption of any Series A Discount Notes or Convertible Notes under any state
securities or Blue Sky laws, the Company shall use its best efforts to obtain
the withdrawal or lifting of such order at the earliest possible time.
(b) To furnish the Initial Purchasers and those persons
identified by the Initial Purchasers to the Company as many copies of the
Preliminary Offering Memoranda and the Offering Memoranda, and any amendments or
supplements thereto, as the Initial Purchasers may reasonably request for the
time period specified in Section 5(c) hereof. Subject to the Initial Purchasers'
compliance with their representations and warranties and agreements set forth in
Section 7 hereof, the Company consents to the use of the Preliminary Offering
Memoranda and the Offering Memoranda, any documents incorporated by reference
therein, and any amendments and supplements thereto required pursuant hereto, by
the Initial Purchasers in connection with Exempt Resales.
(c) During such period as in the opinion of counsel for the
Initial Purchasers an Offering Memoranda is required by law to be delivered in
connection with Exempt Resales by the Initial Purchasers and in connection with
market-making activities of the Initial Purchasers for so long as any Series A
Discount Notes or Convertible Notes are outstanding, (i) not to make any
amendment or supplement to the Offering Memoranda of which the Initial
Purchasers shall not previously have been advised or to which the Initial
Purchasers shall reasonably object after being so advised and (ii) to prepare
promptly upon the Initial Purchasers' reasonable request, any amendment or
supplement to the Offering
6
<PAGE> 8
Memoranda which may be necessary or advisable in connection with such Exempt
Resales or such market-making activities.
(d) If, during the period referred to in Section 5(c) above,
any event shall occur or condition shall exist as a result of which, in the
opinion of counsel to the Initial Purchasers, it becomes necessary to amend or
supplement the Offering Memoranda in order to make the statements therein, in
the light of the circumstances when such Offering Memoranda is delivered to an
Eligible Purchaser, not misleading, or if, in the opinion of counsel to the
Initial Purchasers, it is necessary to amend or supplement either one or both of
the Offering Memoranda to comply with any applicable law, forthwith to prepare
an appropriate amendment or supplement to such Offering Memorandum so that the
statements therein, as so amended or supplemented, will not, in the light of the
circumstances when it is so delivered, be misleading, or so that such Offering
Memorandum will comply with applicable law, and to furnish to the Initial
Purchasers and such other persons as the Initial Purchasers may designate such
number of copies thereof as the Initial Purchasers may reasonably request.
(e) Prior to the sale of all Series A Discount Notes and
Convertible Notes pursuant to Exempt Resales as contemplated hereby, to
cooperate with the Initial Purchasers and counsel to the Initial Purchasers in
connection with the registration or qualification of the Series A Discount Notes
for offer and sale to the Initial Purchasers and pursuant to Exempt Resales
under the securities or Blue Sky laws of such jurisdictions as the Initial
Purchasers may request and to continue such registration or qualification in
effect so long as required for Exempt Resales and to file such consents to
service of process or other documents as may be necessary in order to effect
such registration or qualification; provided, that the Company shall not be
required in connection therewith to qualify as a foreign corporation in any
jurisdiction in which it is not now so qualified or to take any action that
would subject it to general consent to service of process or taxation other than
as to matters and transactions relating to the Preliminary Offering Memoranda,
the Offering Memoranda or Exempt Resales, in any jurisdiction in which it is not
now so subject.
(f) So long as the Notes are outstanding, (i) to mail and make
generally available as soon as practicable after the end of each fiscal year to
the record holders of the Notes a financial report of the Company and its
subsidiaries on a consolidated basis (and a similar financial report of all
unconsolidated subsidiaries, if any), all such financial reports to include a
consolidated balance sheet, a consolidated statement of operations, a
consolidated statement of cash flows and a consolidated statement of
shareholders' equity as of the end of and for such fiscal year, together with
comparable information as of the end of and for the preceding year, certified by
the Company's independent public accountants and (ii) to mail and make generally
available as soon as practicable after the end of each quarterly period (except
for the last quarterly period of each fiscal year) to such holders, a
consolidated balance sheet, a consolidated statement of operations and a
consolidated statement of cash flows (and similar financial reports of all
unconsolidated subsidiaries, if any) as of the end of and for such period, and
for the period from the beginning of such year to the close of such quarterly
period, together with comparable information for the corresponding periods of
the preceding year.
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<PAGE> 9
(g) For so long as the Notes are outstanding, (i) to use its
reasonable efforts to mail and make generally available on a timely basis after
the end of each fiscal year to the record holders of the Notes a consolidated
financial report of each of Omnitel-Sistemi Radiocellulari Italiani S.p.A.
("Omnitel") and Omnitel Pronto Italia S.p.A. ("OPI" and, together with Omnitel,
the "Affiliates" and together with Omnitel, the Company and its subsidiaries,
the "Corporations") on a consolidated basis, all such financial reports to
include a condensed balance sheet, a condensed statement of income, a condensed
statement of cash flows and a condensed statement of stockholders' equity as of
the end of and for such fiscal year, together with comparable information as of
the end of and for the preceding year, certified by each of such Affiliate's
independent auditors and (ii) to mail and make generally available as soon as
practicable after the end of each quarterly period (except for the last
quarterly period of each fiscal year) to such holders, a condensed balance
sheet, a condensed statement of operations and a condensed statement of cash
flows (and similar financial reports of all unconsolidated subsidiaries, if any)
as of the end of and for such period, and for the period from the beginning of
such year to the close of such quarterly period, together with comparable
information for the corresponding periods of the preceding year.
(h) So long as the Notes are outstanding, to furnish to the
Initial Purchasers as soon as available copies of all reports or other
communications furnished by the Company to its security holders or furnished to
or filed with the Commission or any national securities exchange on which any
class of securities of the Company is listed and such other publicly available
information concerning the Company, and/or its subsidiaries as the Initial
Purchasers may reasonably request.
(i) So long as any of the Notes remain outstanding and during
any period in which the Company is not subject to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), to make
available to any holder of Securities in connection with any sale thereof and
any prospective purchaser of such Securities from such holder, the information
("Rule 144A Information") required by Rule 144A(d)(4) under the Act.
(j) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or cause to be
paid all reasonable expenses incident to the performance of the obligations of
the Company under this Agreement, including: (i) the fees, disbursements and
expenses of the counsel to the Company and accountants of the Company and each
of the Affiliates in connection with the sale and delivery of the Series A
Discount Notes and the Convertible Notes to the Initial Purchasers and pursuant
to Exempt Resales, and all other fees and expenses in connection with the
preparation, printing, filing and distribution of the Preliminary Offering
Memoranda, the Offering Memoranda and all amendments and supplements to any of
the foregoing (including financial statements), including the mailing and
delivering of copies thereof to the Initial Purchasers and persons designated by
it in the quantities specified herein, (ii) all costs and expenses related to
the transfer and delivery of the Series A Discount Notes and the Convertible
Notes to the Initial Purchasers and pursuant to Exempt Resales, including any
transfer or other taxes payable thereon, (iii) all costs of printing or
producing this Agreement, the other Operative Documents and any other agreements
or documents in connection with the offering, purchase, sale or delivery of the
Series A Discount Notes or Convertible Notes, (iv) all reasonable expenses in
connection with the registration or qualification of the Series A Discount Notes
or
8
<PAGE> 10
the Convertible Securities for offer and sale under the securities or Blue Sky
laws of the several states and all costs of printing or producing any
preliminary and supplemental Blue Sky Memoranda in connection therewith
(including the filing fees and fees and reasonable disbursements of counsel for
the Initial Purchasers in connection with such registration or qualification and
memoranda relating thereto), (v) the cost of printing certificates representing
the Series A Discount Notes and the Convertible Securities, (vi) all expenses
and listing fees in connection with the application for quotation of the
Convertible Notes in the National Association of Securities Dealers, Inc.
("NASD") Automated Quotation System PORTAL ("PORTAL"), (vii) the fees and
expenses of the Discount Trustee, the Convertible Trustee and such Trustees'
counsel in connection with the Indentures and the Notes, (viii) the costs and
charges of any transfer agent, registrar and/or depositary (including DTC), (ix)
any fees charged by rating agencies for the rating of the Notes, (x) all costs
and expenses of the Exchange Offer and any Registration Statements, as set forth
in the Convertible Subordinated Note Registration Rights Agreement and/or the
Senior Discount Note Registration Rights Agreement, and (xi) and all other costs
and expenses incident to the performance of the obligations of the Company
hereunder for which provision is not otherwise made in this Section 5.
(k) To use its best efforts to effect the inclusion of the
Series A Discount Notes and the Convertible Notes in PORTAL and to maintain the
listing of the Series A Discount Notes and the Convertible Notes on PORTAL for
so long as the Series A Discount Notes and Convertible Notes are outstanding.
(l) To use its best efforts to obtain the approval of DTC for
"book-entry" transfer of the Notes, and to comply with all of its agreements set
forth in the representation letters of the Company to DTC relating to the
approval of the Notes by DTC for "book-entry" transfer.
(m) During the period beginning on the date hereof and
continuing to and including the Closing Date, not to offer, sell, contract to
sell or otherwise transfer or dispose of any debt securities of the Company or
any warrants, rights or options to purchase or otherwise acquire debt securities
of the Company substantially similar to the Notes (other than (i) the Notes and
(ii) commercial paper issued in the ordinary course of business), without the
prior written consent of the Initial Purchasers.
(n) To use its best efforts to cause the Common Stock issuable
upon conversion of the Convertible Notes to be duly included for quotation on
the Nasdaq Stock Market's National Market (the "Nasdaq National Market") prior
to the Firm Closing Date subject to notice of official issuance. The Company
will ensure that such Common Stock remain included for quotation on the Nasdaq
National Market or any other national securities exchange following the Firm
Closing Date for so long as any shares of Common Stock remain registered under
the Exchange Act.
(o) The Company shall not (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, or otherwise transfer
or dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock or
(ii) enter into any swap or other arrangement that transfers all or a portion of
the economic consequences associated with the
9
<PAGE> 11
ownership of any Common Stock (regardless of whether any of the transactions
described in clause (i) or (ii) is to be settled by the delivery of Common
Stock, or such other securities, in cash or otherwise), except to the Initial
Purchasers pursuant to this Agreement, for a period of 90 days after the Closing
Date without the prior written consent of the Initial Purchasers.
Notwithstanding the foregoing, during such period the Company may (i) grant
employee and non-employee director stock options, (ii) issue the Convertible
Notes, (iii) issue shares of Common Stock in connection with any transaction in
which the Company or any subsidiary of the Company acquires directly or
indirectly, any additional equity interest in OPI, and (iv) issue shares of
Common Stock (a) upon the exercise of an option or warrant or the conversion of
a security outstanding on the date hereof or (b) in connection with any
acquisition of a direct or indirect interest in Omnitel Pronto Italia S.p.A. The
Company also agrees not to file any registration statement with respect to any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock (other than with respect to the Convertible Notes)
for a period of 90 days after the Closing Date without the prior written consent
of the Initial Purchasers.
(p) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act) that
would be integrated with the sale of the Series A Discount Notes or the
Convertible Notes to the Initial Purchasers or pursuant to Exempt Resales in a
manner that would require the registration of any such sale of the Series A
Discount Notes or the Convertible Notes under the Act.
(q) Not to voluntarily claim, and to actively resist any
attempts to claim, the benefit of any usury laws against the holders of any
Notes.
(r) To cause the Exchange Offer to be made in the appropriate
form to permit Series B Discount Notes registered pursuant to the Act to be
offered in exchange for the Series A Discount Notes and to comply with all
applicable federal and state securities laws in connection with the Exchange
Offer.
(s) To comply with all of its agreements set forth in the
Registration Rights Agreement.
(t) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by it prior
to the Closing Date and to satisfy all conditions precedent to the delivery of
the Series A Discount Notes and Convertible Notes.
6. Representations, Warranties and Agreements of the Company. As of
the date hereof, the Company represents and warrants to, and agrees with, the
Initial Purchasers that:
(a) The Preliminary Offering Memoranda and the Offering
Memoranda including documents incorporated by reference therein (the
"Incorporated Documents"), do not, and any supplement or amendment to them will
not, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties
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contained in this paragraph (a) shall not apply to statements in or omissions
from the Preliminary Offering Memoranda that are corrected in the Offering
Memoranda (or any supplement or amendment thereto), or statements or omissions
from the Preliminary Offering Memoranda or the Offering Memoranda (or any
supplement or amendment thereto) based upon information relating to the Initial
Purchasers furnished to the Company in writing by the Initial Purchasers
expressly for use therein. No stop order preventing the use of the Preliminary
Offering Memoranda or the Offering Memoranda, or any amendment or supplement
thereto, or any order asserting that any of the transactions contemplated by
this Agreement are subject to the registration requirements of the Act, has been
issued. The Incorporated Documents, at the time they were or hereafter are filed
or last amended, as the case may be, with the Commission, complied and will
comply in all material respects with the requirements of the Exchange Act.
(b) Each of the Company and its subsidiaries and, to the
knowledge of the Company, the Affiliates, has been duly incorporated or
organized, as applicable, is validly existing in good standing under the laws of
its jurisdiction of incorporation or organization, as applicable, and has the
corporate power and authority to carry on its business as described in the
Preliminary Offering Memoranda and the Offering Memoranda and to own, lease and
operate its properties, and each is duly qualified and is in good standing as a
foreign corporation authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the business, prospects, financial condition or
results of operations of the Company and its subsidiaries and the Affiliates,
taken as a whole, or draw into question the validity of this Agreement or the
Operative Documents (a "Material Adverse Effect").
(c) All outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid, non-assessable
and not subject to any preemptive or similar rights.
(d) The entities listed on Schedule B hereto are the only
subsidiaries, direct or indirect, of the Company. All of the outstanding shares
of capital stock of each of the Company's subsidiaries have been duly authorized
and validly issued and are fully paid and non-assessable, and are owned by the
Company, directly or indirectly through one or more subsidiaries, free and clear
of any security interest, claim, lien, encumbrance or adverse interest of any
nature (each, a "Lien"). No subsidiary listed on Schedule B hereto has (i)
contributed in the last three fiscal years or in the nine months ended September
30, 1997 greater than 5% of the Company's revenues, EBITDA (as defined in the
Offering Memoranda) or net income or (ii) at any of the last two fiscal years or
the nine months ended September 30, 1997, constituted greater than 5% of the
total assets of the Company.
(e) To the knowledge of the Company, all of the issued and
outstanding shares of capital stock of, or other ownership interests in, each of
OPI and Omnitel have been duly authorized and validly issued and, to the extent
disclosed in the Offering Memoranda, are owned directly or indirectly, by the
Company.
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<PAGE> 13
(f) Each of the Omnitel Agreement (as defined in the Offering
Memoranda) and the OPI Agreement (as defined in the Offering Memoranda) conforms
in all material respect to the description thereof contained in the Offering
Memoranda.
(g) Each of the Company and its subsidiaries and, to the
knowledge of the Company, the Affiliates has good and marketable title in fee
simple to all real property and good and marketable title to all personal
property owned by such Corporation which is material to its business, in each
case free and clear of all Liens and defects, except such as are described in
the Offering Memoranda or such as do not materially affect the value of such
property and do not materially interfere with the use made and proposed to be
made of such property by such Corporation; and any real property and buildings
held under lease by such Corporation are held by it under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
materially interfere with the use made and proposed to be made of such property
and buildings by such Corporation, in each case except as described in the
Offering Memoranda.
(h) This Agreement has been duly authorized, executed and
delivered by the Company.
(i) The Indentures have been duly authorized by the Company
and, on the Closing Date, will have been validly executed and delivered by the
Company. When the Indentures have been duly executed and delivered by the
Company, the Indentures will be valid and binding agreements of the Company,
enforceable against the Company in accordance with its terms (assuming due
authorization, execution and delivery by each respective Trustee) except as (i)
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other laws affecting
creditors' rights generally and (ii) rights of acceleration and the availability
of equitable remedies (regardless of whether enforcement is considered in a
proceeding at law or in equity) may be limited by equitable principles of
general applicability. On the Closing Date, the Indentures will conform in all
material respects to the requirements of the Trust Indenture Act of 1939, as
amended (the "TIA" or "Trust Indenture Act"), and the rules and regulations of
the Commission applicable to an indenture which is qualified thereunder.
(j) The Series A Discount Notes and the Convertible Notes have
been duly authorized and, on the Closing Date, will have been validly executed
and delivered by the Company. When the Series A Discount Notes and the
Convertible Notes have been issued, executed and authenticated in accordance
with the provisions of the applicable Indenture and delivered to and paid for by
the Initial Purchasers in accordance with the terms of this Agreement, the
Series A Discount Notes and the Convertible Notes will be entitled to the
benefits of the applicable Indenture and will be valid and binding obligations
of the Company, enforceable in accordance with their terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other laws now or hereinafter in effect
affecting creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies (regardless of whether enforcement is
considered in a proceeding at law or in equity) may be limited by equitable
principles of general applicability. On the Closing Date, the
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<PAGE> 14
Series A Discount Notes and the Convertible Notes will conform as to legal
matters to the description thereof contained in the Offering Memoranda.
(k) The Convertible Notes are convertible into Common Stock in
accordance with the terms of the Convertible Indenture; the shares of Common
Stock initially issuable upon conversion of the Convertible Notes have been duly
authorized and reserved for issuance upon such conversion and, when issued upon
such conversion, will be validly issued, fully paid and nonassessable, will
conform to the description thereof contained in the applicable Offering
Memorandum and will be duly authorized for listing on the Nasdaq National
Market, subject to notice of official issuance; the Company has the authorized
and outstanding capital stock as set forth in the Offering Memoranda; and the
stockholders of the Company or other holders of the Company's securities have no
pre-emptive or similar rights with respect to the Convertible Notes or the
Common Stock issuable upon the Convertible Notes.
(l) On the Closing Date, the Series B Discount Notes will have
been duly authorized by the Company. When the Series B Discount Notes are
issued, executed and authenticated in accordance with the terms of the Exchange
Offer and the Discount Indenture, the Series B Discount Notes will be entitled
to the benefits of the Discount Indenture and will be the valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other laws now or hereinafter in effect affecting creditors' rights generally
and (ii) rights of acceleration and the availability of equitable remedies
(regardless of whether enforcement is considered in a proceeding at law or in
equity) may be limited by equitable principles of general applicability.
(m) Each of the Registration Rights Agreement has been duly
authorized by the Company and, on the Closing Date, will have been duly executed
and delivered by the Company. When each of the Registration Rights Agreement has
been duly executed and delivered in accordance with its terms, and (assuming due
authorization, execution, and delivery by you), the Registration Rights
Agreements will be valid and binding agreements of the Company, enforceable
against the Company in accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other laws now or hereinafter in effect
affecting creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies (regardless of whether enforcement is
considered in a proceeding at law or in equity) may be limited by equitable
principles of general applicability. On the Closing Date, the Registration
Rights Agreement will conform as to legal matters to the description thereof in
the Offering Memoranda.
(n) Each of the Company and its subsidiaries and, to the
knowledge of the Company, the Affiliates is not in violation of its respective
charter, by-laws or other organizational documents or in default in the
performance of any obligation, agreement, covenant or condition contained in any
indenture, loan agreement, mortgage, lease or other agreement or instrument that
is material to such Corporation, taken as a whole, to which it is a party or by
which such Company or its property is bound.
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<PAGE> 15
(o) The execution, delivery and performance of this Agreement
and the other Operative Documents by the Company, compliance by the Company with
all provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not (i) require any consent, approval,
authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the securities
or Blue Sky laws of the various states), (ii) conflict with or constitute a
breach of any of the terms or provisions of, or a default under, the charter or
by-laws of the Company or any of its subsidiaries or any indenture, loan
agreement, mortgage, lease or other agreement or instrument that is material to
the Company and its subsidiaries, taken as a whole, to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or their respective property is bound, (iii) violate or conflict
with any applicable law or any rule, regulation, judgment, order or decree of
any court or any governmental body or agency having jurisdiction over the
Company, any of its subsidiaries or their respective property, (iv) result in
the imposition or creation of (or the obligation to create or impose) a Lien
under, any agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
their respective property is bound, or (v) result in the termination, suspension
or revocation of any Authorization (as defined below) of the Company or any of
its subsidiaries or result in any other impairment of the rights of the holder
of any such Authorization except, in the case of clause (i), (iii), (iv) or (v),
for any breach, default, violation, conflict, lien, termination, suspension or
revocation that would not have a Material Adverse Effect.
(p) There are no legal or governmental proceedings pending or,
to the Company's knowledge, threatened to which the Company or any of its
subsidiaries or, to the knowledge of the Company, the Affiliates is or could be
a party or to which any of such Corporation's property is or could be subject,
which could reasonably be expected to have, singly or in the aggregate, in a
Material Adverse Effect.
(q) Neither the Company nor any of its subsidiaries nor, to
the knowledge of the Company, the Affiliates, has violated any foreign, federal,
state or local law or regulation relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("Environmental Laws"), any provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or any provisions
of the Foreign Corrupt Practices Act or the rules and regulations promulgated
thereunder, except for such violations which, singly or in the aggregate, would
not have a Material Adverse Effect.
(r) Each of the Company and its subsidiaries and, to the
knowledge of the Company, the Affiliates is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
are reasonably adequate and customary in the businesses in which such
Corporation is engaged.
(s) To the knowledge of the Company, after due inquiry, there
are no costs or liabilities associated with Environmental Laws (including,
without limitation, any capital or operating expenditures required for clean-up,
closure of properties or compliance with Environmental Laws or any
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<PAGE> 16
Authorization (as defined), any related constraints on operating activities and
any potential liabilities to third parties) which would, singly or in the
aggregate, have a Material Adverse Effect.
(t) Each of the Company and its subsidiaries and, to the
knowledge of the Company, the Affiliates has such foreign, federal, state or
local permits, licenses, consents, exemptions, franchises, authorizations and
other approvals (each, an "Authorization") of, and has made all filings with and
notices to, all governmental or regulatory authorities and self-regulatory
organizations and all courts and other tribunals, including without limitation,
any Authorizations required by the Federal Communications Commission, the
Federal Aviation Administration or the Italian Ministry of Posts and
Communications, as are necessary to own, lease, license and operate its
respective properties and to conduct its business, except where the failure to
have any such Authorization or to make any such filing or notice would not,
singly or in the aggregate, have a Material Adverse Effect. Each such
Authorization is valid and in full force and effect and each of the Corporations
is in compliance with all the terms and conditions thereof and with the rules
and regulations of the authorities and governing bodies having jurisdiction with
respect thereto; and no event has occurred (including, without limitation, the
receipt of any notice from any authority or governing body) which allows or,
after notice or lapse of time or both, would allow, revocation, suspension or
termination of any such Authorization or results or, after notice or lapse of
time or both, would result in any other impairment of the rights of the holder
of any such Authorization; and such Authorizations contain no restrictions that
are burdensome to such Corporation; except where such failure to be valid and in
full force and effect or to be in compliance, the occurrence of any such event
or the presence of any such restriction would not, singly or in the aggregate,
have a Material Adverse Effect.
(u) Except as disclosed in the Offering Memoranda, no
relationship, direct or indirect, exists between or among the Company or any of
its subsidiaries on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company or any of its subsidiaries on the other
hand, which would be required by the Act to be described in the Offering
Memoranda if the Offering Memoranda were a prospectus included in a registration
statement on Form S-1 filed with the Commission.
(v) Each of Company and its subsidiaries and, to the knowledge
of the Company, the Affiliates maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(w) The accountants, Ernst & Young LLP, that have certified
the financial statements and supporting schedules thereto of the Company and its
subsidiaries included in the Preliminary Offering Memoranda and the Offering
Memoranda are independent public accountants with respect to the Company and its
subsidiaries, as required by the Act and the Exchange Act. The accountants,
Coopers & Lybrand S.p.A., that have certified the financial statements and
supporting schedules thereto of the
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Affiliates included in the Preliminary Memoranda and the Offering Memoranda are,
to the knowledge of the Company, independent public accountants with respect to
the Affiliates. The historical financial statements, together with related
schedules and notes, set forth in the Preliminary Offering Memoranda and the
Offering Memoranda comply as to form in all material respects with the
requirements applicable to registration statements on Form S-1 under the Act.
(x) The historical financial statements, together with related
schedules and notes forming part of the Offering Memoranda (and any amendment or
supplement thereto), present fairly the consolidated financial position, results
of operations and changes in financial position of the Company, its subsidiaries
and, to the knowledge of the Company, the Affiliates on the basis stated in the
Offering Memoranda at the respective dates or for the respective periods to
which they apply; such statements and related schedules and notes have been
prepared in accordance with generally accepted accounting principles in the
United States consistently applied throughout the periods involved, except as
disclosed therein; and the other financial and statistical information and data
set forth in the Offering Memoranda (and any amendment or supplement thereto),
are, in all material respects, accurately presented and prepared on a basis
consistent with such financial statements and the books and records of the
Corporations.
(y) All material tax returns required to be filed by each of
the Company and its subsidiaries in any jurisdiction have been filed, other than
those filings being contested in good faith, and all material taxes, including
withholding taxes, penalties and interest, assessments, fees and other charges
due pursuant to such returns or pursuant to any assessment received by such
Corporation have been paid, other than those being contested in good faith and
for which adequate reserves have been provided.
(z) The Company is not and, after giving effect to the
offering and sale of the Series A Discount Notes and the Convertible Notes and
the application of the net proceeds thereof as described in the Offering
Memoranda, will not be, an "investment company," as such term is defined in the
Investment Company Act of 1940, as amended.
(aa) There are no contracts, agreements or understandings,
other than those pursuant to the Operative Documents, between the Company and
any person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of the
Company or to require the Company to include such securities with the Notes
registered pursuant to any Registration Statement.
(bb) Neither the Company nor any of its subsidiaries nor any
agent thereof acting on the behalf of them has taken, and none of them will
take, any action that might cause this Agreement or the issuance or sale of the
Series A Discount Notes and the Convertible Notes to violate Regulation G (12
C.F.R. Part 207), Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R.
Part 221) or Regulation X (12 C.F.R. Part 224) of the Board of Governors of the
Federal Reserve System.
(cc) To the knowledge of the Company, after due inquiry, no
action has been taken and no law, statute, rule or regulation or order has been
enacted, adopted or issued by any governmental agency or body which prevents the
execution, delivery and performance of any of the
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<PAGE> 18
Operative Documents, the issuance of the Series A Discount Notes or the
Convertible Notes, or suspends the sale of the Series A Discount Notes or the
Convertible Notes in any jurisdiction referred to in Section 5(e); and, to the
knowledge of the Company, after due inquiry, no injunction, restraining order or
other order or relief of any nature by a federal or state court or other
tribunal of competent jurisdiction has been issued with respect to the Company
which would prevent or suspend the issuance or sale of the Series A Discount
Notes or the Convertible Notes in any jurisdiction referred to in Section 5(e).
(dd) No "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436(g)(2) under the
Act (i) has imposed (or has informed the Company that it is considering
imposing) any condition (financial or otherwise) on the Company's retaining any
rating assigned to the Company, any securities of the Company or (ii) has
indicated to the Company that it is considering (a) the downgrading, suspension,
or withdrawal of, or any review for a possible change that does not indicate the
direction of the possible change in, any rating so assigned or (b) any change in
the outlook for any rating of the Company or any securities of the Company.
(ee) All indebtedness of the Company that will be repaid with
the proceeds of the issuance and sale of the Series A Discount Notes and the
Convertible Notes was incurred, and the indebtedness represented by the Series A
Discount Notes and the Convertible Notes is being incurred, for proper purposes
and in good faith and the Company was, at the time of the incurrence of such
indebtedness that will be repaid with the proceeds of the issuance and sale of
the Series A Discount Notes and the Convertible Notes, and will be on the
Closing Date (after giving effect to the application of the proceeds from the
issuance of the Series A Discount Notes and the Convertible Notes) solvent, and
had at the time of the incurrence of such indebtedness that will be repaid with
the proceeds of the issuance and sale of the Series A Discount Notes and the
Convertible Notes and will have on the Closing Date (after giving effect to the
application of the proceeds from the issuance of the Series A Discount Notes and
the Convertible Notes) sufficient capital for carrying on its business and was,
at the time of the incurrence of such indebtedness that will be repaid with the
proceeds of the issuance and sale of the Series A Discount Notes and the
Convertible Notes, and will be on the Closing Date (after giving effect to the
application of the proceeds from the issuance of the Series A Discount Notes and
the Convertible Notes) able to pay their respective debts as they mature.
(ff) Since the respective dates as of which information is
given in the Offering Memoranda other than as set forth in the Offering
Memoranda (exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), (i) there has not occurred any material adverse change
or any development involving a prospective material adverse change in the
condition, financial or otherwise, or the earnings, business, management or
operations of the Company and its subsidiaries and to the knowledge of the
Company, the Affiliates, taken as a whole, (ii) there has not been any material
adverse change or any development involving a prospective material adverse
change in the capital stock or in the long-term debt of the Company or any of
its subsidiaries or to the knowledge of the Company, the Affiliates, and (iii)
neither the Company nor any of its subsidiaries nor, to the knowledge of the
Company, any of the Affiliates has incurred any material liability or
obligation, direct or contingent.
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(gg) The Securities are eligible for resale pursuant to
Rule 144A and when the Series A Discount Notes and the Convertible Notes are
issued and delivered pursuant to this Agreement, neither the Series A Discount
Notes nor the Convertible Notes will be of the same class (within the meaning of
Rule 144A under the Act) as any security of the Company that is listed on a
national securities exchange registered under Section 6 of the Exchange Act or
that is quoted in a United States automated inter-dealer quotation system.
(hh) No form of general solicitation or general advertising
(as defined in Regulation D under the Act) was used by the Company, or any of
their respective representatives (other than the Initial Purchaser, as to whom
the Company makes no representation) in connection with the offer and sale of
the Series A Discount Notes and the Convertible Notes contemplated hereby,
including, but not limited to, articles, notices or other communications
published in any newspaper, magazine, or similar medium or broadcast over
television or radio, or any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising. No securities of the same
class as the Series A Discount Notes and the Convertible Notes have been issued
and sold by the Company within the six-month period immediately prior to the
date hereof.
(ii) Prior to the effectiveness of any Registration Statement,
the Indentures are not required to be qualified under the Trust Indenture Act of
1939, as amended.
(jj) The Company and its respective affiliates and all persons
acting on their behalf (other than the Initial Purchasers, as to whom the
Company makes no representation) have complied with and will comply with the
offering restrictions requirements of Regulation S in connection with the
offering of the Notes outside the United States and, in connection therewith,
the Offering Memorandum will contain the disclosure required by Rule 902(h).
(kk) Neither of the Company, nor any of its respective
affiliates or any person acting on its behalf (other than the Initial
Purchasers, as to whom the Company makes no representation) has engaged or will
engage in any directed selling efforts within the meaning of Regulation S under
the Act ("Regulation S") with respect to the Series A Discount Notes or the
Convertible Notes.
(ll) No registration under the Act of the Series A Discount
Notes or the Convertible Notes is required for the sale of the Series A Discount
Notes and the Convertible Notes to the Initial Purchasers as contemplated hereby
or for the Exempt Resales assuming the accuracy of the Initial Purchasers'
representations and warranties and agreements set forth in Section 7 hereof.
(mm) Each certificate signed by any officer of the Company and
delivered to the Initial Purchasers or counsel for the Initial Purchasers shall
be deemed to be a representation and warranty by the Company to the Initial
Purchasers as to the matters covered thereby.
The Company acknowledges that the Initial Purchasers and, for
purposes of the opinions to be delivered to the Initial Purchasers pursuant to
Section 9 hereof, counsel to the Company and counsel to
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<PAGE> 20
the Initial Purchasers will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.
7. Initial Purchasers' Representations and Warranties. Each Initial
Purchaser, severally and not jointly, represents and warrants to, and agrees
with, the Company:
(a) Such Initial Purchaser is a QIB, with such knowledge and
experience in financial and business matters as is necessary in order to
evaluate the merits and risks of an investment in the Series A Discount Notes
and the Convertible Notes.
(b) Such Initial Purchaser (A) is not acquiring the Series A
Discount Notes or the Convertible Notes with a view to any distribution thereof
or with any present intention of offering or selling any of the Series A
Discount Notes or the Convertible Notes in a transaction that would violate the
Act or the securities laws of any state of the United States or any other
applicable jurisdiction and (B) will be reoffering and reselling the Series A
Discount Notes and the Convertible Notes only to (x) QIBs in reliance on the
exemption from the registration requirements of the Act provided by Rule 144A,
and (y) in offshore transactions in reliance upon Regulation S under the Act.
(c) Such Initial Purchaser agrees that no form of general
solicitation or general advertising (within the meaning of Regulation D under
the Act) has been or will be used by such Initial Purchaser or any of its
representatives in connection with the offer and sale of the Series A Discount
Notes or the Convertible Notes pursuant hereto, including, but not limited to,
articles, notices or other communications published in any newspaper, magazine
or similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or general
advertising.
(d) Such Initial Purchaser agrees that, in connection with
Exempt Resales, such Initial Purchaser will solicit offers to buy the Series A
Discount Notes and Convertible Notes only from, and will offer to sell the
Series A Discount Notes and the Convertible Notes only to, Eligible Purchasers.
Each Initial Purchaser further agrees that it will offer to sell the Series A
Discount Notes and the Convertible Notes only to, and will solicit offers to buy
the Series A Discount Notes and the Convertible Notes only from (A) Eligible
Purchasers that the Initial Purchaser reasonably believes are QIBs, and (B)
Regulation S Purchasers, in each case, that agree that (x) the Series A Discount
Notes and the Convertible Notes purchased by them may be resold, pledged or
otherwise transferred within the time period referred to under Rule 144(k)
(taking into account the provisions of Rule 144(d) under the Act, if applicable)
under the Act, as in effect on the date of the transfer of such Series A
Discount Notes and the Convertible Notes, only (I) to the Company or any of its
subsidiaries, (II) to a person whom the seller reasonably believes is a QIB
purchasing for its own account or for the account of a QIB in a transaction
meeting the requirements of Rule 144A under the Act, (III) in an offshore
transaction (as defined in Rule 902 under the Act) meeting the requirements of
Rule 904 of the Act, (IV) in a transaction meeting the requirements of Rule 144
under the Act, (V) to an Accredited Institution that, prior to such transfer,
furnishes the Trustee a signed letter containing certain representations and
agreements relating to the registration of transfer of such Series A
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<PAGE> 21
Note or Convertible Notes (the form of which can be obtained from the Discount
Trustee or the Convertible Trustee, as applicable) and, if such transfer is in
respect of an aggregate principal amount of Series A Discount Notes or
Convertible Notes less than $100,000, an opinion of counsel acceptable to the
Company that such transfer is in compliance with the Act, (VI) in accordance
with another exemption from the registration requirements of the Act (and based
upon an opinion of counsel acceptable to the Company) or (VII) pursuant to an
effective registration statement and, in each case, in accordance with the
applicable securities laws of any state of the United States or any other
applicable jurisdiction and (y) they will deliver to each person to whom such
Series A Discount Notes or the Convertible Notes or an interest therein is
transferred a notice substantially to the effect of the foregoing.
(e) Such Initial Purchaser and its affiliates or any person
acting on its or their behalf have not engaged or will not engage in any
directed selling efforts within the meaning of Regulation S with respect to the
Series A Discount Notes or the Convertible Notes.
(f) The Series A Discount Notes and the Convertible Notes
offered and sold by such Initial Purchaser pursuant hereto in reliance on
Regulation S have been and will be offered and sold only in offshore
transactions.
(g) Each Initial Purchaser agrees that it has not offered or
sold and will not offer or sell the Discount Notes or the Convertible Notes in
the United States or to, or for the benefit or account of, a U.S. Person (other
than a distributor), in each case, as defined in Rule 902 under the Act (i) as
part of its distribution at any time and (ii) otherwise until 40 days after the
later of the commencement of the offering of the Discount Notes and the
Convertible Notes pursuant hereto and the Closing Date or the Option Closing
Date, as the case may be, other than in accordance with Regulation S of the Act
or another exemption from the registration requirements of the Act. Such Initial
Purchaser agrees that, during such 40-day restricted period, it will not cause
any advertisement with respect to the Discount Notes or the Convertible Notes
(including any "tombstone" advertisement) to be published in any newspaper or
periodical or posted in any public place and will not issue any circular
relating to either the Discount Notes or the Convertible Notes, except such
advertisements as are permitted by and include the statements required by
Regulation S.
(h) Each Initial Purchaser agrees that, at or prior to
confirmation of a sale of Discount Notes or the Convertible Notes by it to any
distributor, dealer or person receiving a selling concession, fee or other
remuneration during the 40-day restricted period referred to in Rule 903(c)(2)
under the Act, it will send to such distributor, dealer or person receiving a
selling concession, fee or other remuneration a confirmation or notice to
substantially the following effect:
"The Discount Notes and the Convertible Notes covered
hereby have not been registered under the U.S. Securities Act of
1933, as amended (the "Securities Act"), and may not be offered and
sold within the United States or to, or for the account or benefit
of, U.S. persons (i) as part of your distribution at any time or
(ii) otherwise until 40 days after the later of the
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<PAGE> 22
commencement of the Offering and Closing Date or the Option Closing
Date, as the case may be, except in either case in accordance with
Regulation S under the Securities Act (or Rule 144A or to Accredited
Institutions in transactions that are exempt from the registration
requirements of the Securities Act), and in connection with any
subsequent sale by you of the Discount Notes or the Convertible
Notes covered hereby in reliance on Regulation S during the period
referred to above to any distributor, dealer or person receiving a
selling concession, fee or other remuneration, you must deliver a
notice to substantially the foregoing effect. Terms used above have
the meanings assigned to them in Regulation S."
(i) The sale of the Series A Discount Notes and the
Convertible Notes offered and sold by such Initial Purchaser pursuant hereto in
reliance on Regulation S is not part of a plan or scheme to evade the
registration provisions of the Act.
(j) Such Initial Purchaser further represents and agrees that
(1) it has not offered or sold and will not offer or sell any Series A Notes or
Convertible Notes to persons in the United Kingdom prior to the expiration of
the period of six months from the Closing Date, except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their business or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995, (ii) it has complied and will comply with
all applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Series A Notes and Convertible Notes in,
from or otherwise involving the United Kingdom and (iii) it has only issued or
passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issuance of the Series A Notes or the
Convertible Notes to a person who is of a kind described in Article 11(3) of the
Financial Services Act of 1986 (Investment Advertisements) (Exemptions) Order
1996 (as amended) or is a person to whom the document may otherwise lawfully be
issued or passed on.
(k) Such Initial Purchaser agrees that it will not offer, sell
or deliver any of the Series A Notes or the Convertible Notes in any
jurisdiction outside the United States except under circumstances that will
result in compliance with the applicable laws thereof, and that it will take at
its own expense whatever action is required to permit its purchase and resale of
the Series A Notes or the Convertible Notes in such jurisdictions. Such Initial
Purchaser understands that no action has been taken to permit a public offering
in any jurisdiction outside the United States where action would be required for
such purpose.
Such Initial Purchaser acknowledges that the Company and, for
purposes of the opinions to be delivered to each Initial Purchaser pursuant to
Section 9 hereof, counsel to the Company and counsel to the Initial Purchasers
will rely upon the accuracy and truth of the foregoing representations and such
Initial Purchaser hereby consents to such reliance.
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<PAGE> 23
8. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Initial Purchaser, its directors, officers, partners, employees and each person,
if any, who is an affiliate of such Initial Purchaser within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, and each of its
directors, officers, partners and employees from and against any and all losses,
claims, damages, liabilities and judgments (including, without limitation, any
legal or other expenses incurred in connection with investigating or defending
any matter, including any action, that could give rise to any such losses,
claims, damages, liabilities or judgments) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Offering Memoranda
(or any amendment or supplement thereto), the Preliminary Offering Memoranda or
any Rule 144A Information provided by the Company to any holder or prospective
purchaser of Series A Discount Notes or Convertible Securities pursuant to
Section 5(h) or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except untrue statements made in or omission from the
Preliminary Offering Memoranda (or any supplement or amendment thereto) that are
corrected in the Offering Memoranda (or any supplement or amendment thereto)
insofar as such losses, claims, damages, liabilities or judgments are caused by
any such untrue statement or omission or alleged untrue statement or omission
based upon information relating to the Initial Purchasers furnished in writing
to the Company by such Initial Purchaser; provided, that the foregoing indemnity
agreement with respect to any Preliminary Offering Memoranda shall not inure to
the benefit of any Initial Purchaser who failed to deliver an Offering Memoranda
(as then amended or supplemented, provided by the Company to the several Initial
Purchasers in the requisite quantity and on a timely basis to permit proper
delivery on or prior to the Closing Date) to the person asserting any losses,
claims, damages and liabilities and judgments caused by any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Offering Memoranda, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, if such material misstatement or omission or
alleged material misstatement or omission was cured in the Offering Memoranda.
(b) Each Initial Purchaser, severally and not jointly, agrees
to indemnify and hold harmless the Company, and its directors and officers and
each person, if any, who controls (within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act) the Company, to the same extent as the
foregoing indemnity from the Company to the Initial Purchasers but only with
reference to information relating to the Initial Purchasers furnished in writing
to the Company by the Initial Purchasers expressly for use in the Preliminary
Offering Memoranda or the Offering Memoranda.
(c) In case any action shall be commenced involving any person
in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b)
(the "indemnified party"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "indemnifying party") in
writing and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 8(a) and 8(b), the Initial Purchasers shall not
be required
22
<PAGE> 24
to assume the defense of such action pursuant to this Section 8(c), but may
employ separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
the Initial Purchasers). Any indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment of such counsel shall have been
specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party shall have failed to assume the defense of such action or
employ counsel reasonably satisfactory to the indemnified party or (iii) the
named parties to any such action (including any impleaded parties) include both
the indemnified party and the indemnifying party, and the indemnified party
shall have been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the indemnifying party (in which case the indemnifying party shall
not have the right to assume the defense of such action on behalf of the
indemnified party). In any such case, the indemnifying party shall not, in
connection with any one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for all indemnified parties
and all such fees and expenses shall be reimbursed as they are incurred. Such
firm shall be designated in writing by Donaldson, Lufkin & Jenrette Securities
Corporation, in the case of the parties indemnified pursuant to Section 8(a),
and by the Company, in the case of parties indemnified pursuant to Section 8(b).
The indemnifying party shall indemnify and hold harmless the indemnified party
from and against any and all losses, claims, damages, liabilities and judgments
by reason of any settlement of any action (i) effected with its written consent
or (ii) effected without its written consent if the settlement is entered into
more than 45 business days after the indemnifying party shall have received a
request from the indemnified party for reimbursement for the fees and expenses
of counsel (in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the indemnifying
party shall have failed to comply with such reimbursement request and such
indemnifying party shall have received notice of the terms of the settlement at
least 30 days prior to such settlement being entered into, provided, however, an
indemnifying party shall be entitled to withhold any disputed portion of a
reimbursement in respect of a settlement effected without its written consent,
pending resolution of a dispute regarding the request if such indemnifying party
(i) reimburses such indemnified party in accordance with such request to the
extent it considers in good faith such request to be reasonable and (ii)
provides written notice detailing with reasonable specificity to the indemnified
party why the unpaid balance is unreasonable. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement or compromise of, or consent to the entry of judgment with respect
to, any pending or threatened action in respect of which the indemnified party
is or could have been a party and indemnity or contribution may be or could have
been sought hereunder by the indemnified party, unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability on claims that are or could have been the subject
matter of such action and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party.
(d) To the extent the indemnification provided for in this
Section 8 is determined by a court of competent jurisdiction to be unavailable
to an indemnified party or insufficient in respect of any losses, claims,
damages, liabilities or judgments referred to therein or insufficient to hold it
harmless,
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<PAGE> 25
then each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and each Initial Purchaser on the other hand from the
offering of the Series A Discount Notes and the Convertible Securities or (ii)
if the allocation provided by clause 8(d)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 8(d)(i) above but also the relative
fault of the Company, on the one hand, and each Initial Purchaser, on the other
hand, in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Company, on the
one hand, and each Initial Purchaser, on the other hand, shall be deemed to be
in the same proportion as the total net proceeds from the offering of the Series
A Discount Notes and the Convertible Securities (after underwriting discounts
and commissions, but before deducting expenses) received by the Company, and the
total discounts and commissions received by each Initial Purchaser bears to the
total price to investors of the Series A Discount Notes and the Convertible
Securities, in each case as set forth in the table on the cover page of the
Offering Memoranda. The relative fault of the Company, on the one hand, and each
Initial Purchaser, on the other hand, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company, on the one hand, or such Initial Purchaser,
on the other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Initial Purchasers agree that it would not
be just and equitable if contribution pursuant to this Section 8(d) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses incurred
by such indemnified party in connection with investigating or defending any
matter, including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 8, no Initial Purchaser shall be required to contribute any amount in
excess of the amount by which the total discounts and commissions received by
such Initial Purchaser exceeds the amount of any damages which such Initial
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Initial Purchasers' obligations to contribute pursuant to
this Section 8(d) are several in proportion to the respective principal amount
of Notes purchased by each of the Initial Purchasers hereunder, and not joint.
(e) The remedies provided for in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
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<PAGE> 26
9. Conditions of Initial Purchasers' Obligations. The several
obligations of the Initial Purchasers to purchase the Series A Discount Notes
and the Firm Notes under this Agreement and the Additional Notes, if any, on any
Option Closing Date are subject to the satisfaction of each of the following
conditions:
(a) All the representations and warranties of the Company
contained in this Agreement shall be true and correct on Closing Date, and on
each Option Closing Date, if any, with the same force and effect as if made on
and as of the Closing Date, or on each Option Closing Date, if any.
(b) On or after the date hereof, (i) there shall not have
occurred any downgrading, suspension or withdrawal of, nor shall any notice have
been given to the Company of any potential or intended downgrading, suspension
or withdrawal of, or of any review (or of any potential or intended review) for
a possible change that does not indicate the direction of the possible change
in, any rating of the Company or any securities of the Company (including,
without limitation, the placing of any of the foregoing ratings on credit watch
with negative or developing implications or under review with an uncertain
direction) by any "nationally recognized statistical rating organization" as
such term is defined for purposes of Rule 436(g)(2) under the Act, (ii) there
shall not have occurred any change, nor shall any notice have been given of any
potential or intended change, in the outlook for any rating of the Company or
any securities of the Company by any such rating organization and (iii) no such
rating organization shall have given notice that it has assigned (or is
considering assigning) a lower rating to the Notes than that on which the Notes
were marketed.
(c) Since the respective dates as of which information is
given in the Offering Memoranda, other than as set forth in the Offering
Memoranda (exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), (i) there shall not have occurred any change or any
development involving a prospective change in the condition, financial or
otherwise, or the earnings, business, management or operations of the Company
and its subsidiaries and the Affiliates, taken as a whole, (ii) there shall not
have been any change or any development involving a prospective change in the
capital stock or in the long-term debt of the Company or any of its subsidiaries
or the Affiliates and (iii) neither the Company nor any of its subsidiaries nor,
to the knowledge of the Company, the Affiliates shall have incurred any
liability or obligation, direct or contingent, the effect of which, in any such
case described in clause 9(c)(i), 9(c)(ii) or 9(c)(iii), in your judgment, is
material and adverse and, in your reasonable judgment, makes it impracticable to
market the Series A Discount Notes or the Convertible Notes on the terms and in
the manner contemplated in the Offering Memoranda.
(d) You shall have received on the Closing Date a certificate
dated the Closing Date, and on an Option Closing Date, if any, dated such Option
Closing Date, signed by the President and the Chief Financial Officer of the
Company, confirming the matters set forth in Sections 6(ff), 9(a) and 9(b) and
stating that the Company has complied with all the agreements and satisfied all
of the conditions herein contained and required to be complied with or satisfied
on or prior to the Closing Date or Option Closing Date, as the case may be.
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<PAGE> 27
(e) You shall have received on the Closing Date and each
Option Closing Date, if any, an opinion (satisfactory to you and counsel for the
Initial Purchasers), dated the Closing Date or such Option Closing Date, as the
case may be, of Richard J. Lubasch, Senior Vice President and General Counsel of
the Company and its subsidiaries, to the effect that:
(i) each of the Company and its subsidiaries is duly
qualified and is in good standing as a foreign corporation
authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property
requires such qualification, except where the failure to be so
qualified would not have a Material Adverse Effect;
(ii) all the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are
fully paid, non-assessable and not subject to any preemptive
or similar rights;
(iii) all of the outstanding shares of capital stock of
each of the Company's subsidiaries have been duly authorized
and validly issued and are fully paid and non-assessable, and
all or a majority of the outstanding shares of capital stock
of, or other ownership interest in, each of the Company's
subsidiaries are owned by the Company, free and clear of any
Lien;
(iv) the Company has the authorized and outstanding
capital stock as set forth in the Offering Memoranda;
(v) the execution, delivery and performance of this
Agreement and the other Operative Documents by the Company,
the compliance by the Company with all provisions hereof and
thereof and the consummation of the transactions contemplated
hereby and thereby will not (i) violate any provision of the
charter or by-laws of the Company or any of its subsidiaries,
(ii) constitute a breach of or default under any of the terms
of any indenture, or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries are bound, (iii)
violate or conflict with any rule, statute or regulation of
the United States, the State of New York or the State of
Delaware or any judgment, order or decree applicable to the
Company or any of its Subsidiaries of any court or any
governmental body or agency of the United States or the States
of Delaware or New York having jurisdiction over the Company
or any of its subsidiaries;
(vi) to the best of his knowledge after due inquiry,
neither the Company nor any of its subsidiaries has violated
the provisions of the Foreign Corrupt Practices Act or the
rules and regulations promulgated thereunder, except for such
violations which, singly or in the aggregate, would not have a
Material Adverse Effect, except that no opinion need be given
with respect to the books and records
26
<PAGE> 28
of the Company and its subsidiaries or their accounting
controls and other matters referred to in Section 13(b) of the
Securities Exchange Act of 1934;
(vii) no consent, approval, authorization or order of
any Delaware, New York or United States federal court or
governmental agency or body is required for the consummation
of the transactions contemplated herein, except such as may be
required under the Blue Sky or securities laws of any
jurisdiction in connection with the purchase and sale of the
Securities by the Underwriter (as to which counsel need
express no opinion) and such other approvals (specified in
such opinion) as have been obtained;
(viii) there are no contracts, agreements or
understandings, other than as further described in the
Offering Memoranda between the Company and any person granting
such person the right to require the Company to file a
registration statement under the Act with respect to any
securities of the Company or to require the Company to include
such securities with the Notes registered pursuant to any
Registration Statement;
(ix) neither the Company nor any of the subsidiaries is
now, nor immediately after the sale of the Securities to be
sold by it will be, (a) an "investment company" or a company
"controlled" by an investment company within the meaning of
the Investment Company Act of 1940, as amended, or (b) a
"holding company" or a "subsidiary company" of a holding
company, or an "affiliate", thereof within the meaning of the
Public Utility Holding Company Act of 1935, as amended;
In addition, Richard J. Lubasch shall state that he has participated
in discussions with officers and other representatives of the Company,
representatives of the independent public accountants for the Company and you in
which the contents of the Offering Memoranda and related matters were discussed
and, although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Offering Memoranda or any documents incorporated by reference
in the Offering Memoranda and has not made any independent verification thereof
(except to the extent specified in paragraph (iv) above), no fact has come to
the attention of such counsel that leads him to believe that the Offering
Memoranda, as of the date of such opinion, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (it being understood that such counsel is
not commenting as to the financial statements, schedules and other financial
data included in, or omitted from, or referred to in the Offering Memoranda).
The opinion of such counsel described in Section 9(e) above shall be
rendered to you at the request of the Company and shall so state therein.
27
<PAGE> 29
(f) You shall have received on the Closing Date and each
Option Closing Date, if any, an opinion (satisfactory to you and counsel for the
Initial Purchasers), dated the Closing Date or such Option Closing Date, as the
case may be, of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the
Company, to the effect that:
(i) the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of
its jurisdiction of incorporation and has the corporate power
and authority to carry on its business and to own, lease and
operate its properties in each case as described in the
Offering Memoranda;
(ii) the Series A Discount Notes and the Convertible
Notes have been duly authorized by the Company and, when
executed and authenticated in accordance with the provisions
of the Indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement,
will be entitled to the benefits of the Indenture and will be
valid and binding obligations of the Company, enforceable in
accordance with their terms except to the extent (a)
enforcement thereof may be limited by (1) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance
or similar laws now or hereafter in effect relating to
creditors' rights generally, (2) general principles of equity
(regardless of whether enforcement is considered in a
proceeding in equity or at law), (3) requirements that a claim
with respect to any Discount Notes (or a judgment denominated
other than in U.S. dollars in respect of such a claim) be
converted into U.S. dollars at a rate of exchange prevailing
on a date determined pursuant to applicable law and (4)
governmental authority to limit, delay or prohibit the making
of, payments of in a foreign currency, currency units or
composite currencies, outside the United States and (b) the
waivers contained in Section 4.9 of the Convertible Indenture
and Section 4.06 of the Discount Indenture may be deemed
unenforceable;
(iii) the Indentures have been duly authorized, executed
and delivered by the Company and are valid and binding
obligations of the Company, enforceable against the Company in
accordance with their respective terms except to the extent
(a) enforcement thereof may be limited by (1) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance
or other similar laws now or hereafter in effect relating to
creditors' rights generally, (2) general principles of equity
(regardless of whether enforcement is considered in a
proceeding in equity or at law), (3) requirements that a claim
with respect to any Discount Notes (or a judgment denominated
other than in U.S. dollars in respect of such a claim) be
converted into U.S. dollars at a rate of exchange prevailing
on a date determined pursuant to applicable law and (4)
governmental authority to limit, delay or prohibit the making
of, payments of in a foreign currency, currency units or
composite currencies, outside the United States and (b) the
waivers contained in
28
<PAGE> 30
Section 4.06 of the Convertible Indenture and Section 4.9 of
the Discount Indenture may be deemed unenforceable;
(iv) this Agreement has been duly authorized, executed
and delivered by the Company;
(v) each of the Senior Discount Note Registration Rights
Agreement and Convertible Subordinated Note Registration
Rights Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding obligation
of the Company, enforceable against the Company in accordance
with its terms, except to the extent (1) enforcement thereof
may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to creditors' rights generally,
(2) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in
equity), (3) requirements that a claim with respect to any
Discount Notes (or a judgment denominated other than in U.S.
dollars in respect of such a claim) be converted into U.S.
dollars at a rate of exchange prevailing on a date determined
pursuant to applicable law and (4) governmental authority to
limit, delay or prohibit the making of, payments of in a
foreign currency, currency units or composite currencies,
outside the United States and (5) rights to indemnification
and contribution may be limited by United States federal or
state laws or the policies under such laws;
(vi) the Series B Senior Notes have been duly authorized
by the Company;
(vii) the Indentures and the Securities conform in all
material respects to the descriptions thereof contained in the
Offering Memoranda and the statements under the caption
"Taxation" in the Offering Memoranda, insofar as they purport
to constitute statements of law or legal conclusions, have
been reviewed by us and fairly present information disclosed
therein in all material respects;
(viii) assuming the accuracy of the representations made
by the Company, based on such counsel's analysis of
representations made to them by the Company regarding the
Company's historical development, the activities of the
Company's employees, the Company's assets and investment
activities, the Company's sources of revenues and the
Company's public statements regarding the Company's business
and all such other matters which such counsel has deemed
relevant for purposes of rendering such opinion, such counsel
is of the opinion that the Company is not subject to
registration as an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended;
29
<PAGE> 31
(ix) the shares of Common Stock initially issuable upon
conversion of the Convertible Notes have been duly authorized
and reserved for issuance upon such conversion and, when
issued upon such conversion, in accordance with the terms of
the Convertible Indenture, will be validly issued, fully paid
and nonassessable; the Common Stock of the Company conforms in
all material respects to the description thereof contained in
the applicable Offering Memorandum regarding the Convertible
Notes;
(x) the stockholders of the Company or other holders of
the Company's securities have no pre-emptive or similar rights
arising under the Company's Certificate of Incorporation,
By-laws or the Delaware General Corporation Law with respect
to the Convertible Notes or the Common Stock issuable upon
conversion of the Convertible Notes;
(xi) the execution and delivery by the Company of the
Indentures, this Agreement and each of the Registration Rights
Agreements and the consummation by the Company of the
transactions contemplated under each of the Indentures, this
Agreement and each of the Registration Rights Agreements, each
in accordance with its terms do not (a) (i) conflict any
provision of the Certificate of Incorporation or by-laws of
the Company or (ii) constitute a breach of or default under
any of the terms of any indenture or other agreement governed
by the laws of the State of New York or the Delaware General
Corporation Law (the "DGCL") to which the Company is a party
or bound which is listed as an exhibit to the Company's most
recent Form 10-K (except that such counsel need not express an
opinion as to any covenant, restriction or provision of any
such agreement with respect to financial covenants, ratios or
tests or any aspect of the financial condition or results of
operations of the Company) or (iii) result in the violation of
the DGCL or of any statute, rule or regulation (collectively,
the "Requirements of Law") of the United States, the State of
New York or the State of Delaware or any judgment, order or
decree know to such counsel to be applicable to the Company or
of any court, regulatory body, administrative agency,
governmental body or arbitrator (collectively, the "Orders")
of the United States or the States of Delaware or New York
having jurisdiction over the Company; provided, however, that
such counsel's opinion expressed in this paragraph may be
based on such counsel's review of those Requirements of Law
which, in such counsel's experience, are normally applicable
to transactions of the type provided for in this Agreement,
but without having made any special investigation concerning
any other Requirements of Law, and those Orders specifically
identified to such counsel by the Company as being Orders to
which it is subject; provided, however, that such counsel need
express no opinion with respect to (x) the adequacy of
disclosure for federal securities law purposes or the
fairness, completeness, correctness or accuracy of the
statements contained in the Offering Memoranda or
30
<PAGE> 32
the documents incorporated by reference therein, which matters
shall be addressed in paragraph following paragraph (xiii)
below, or (y) any state securities or Blue Sky laws;
(xii) assuming that (i) each Initial Purchaser is a QIB,
or a Regulation S Purchaser, (ii) the accuracy of the
representations and warranties of the Company set forth in
Section 6 of this Agreement and of the Initial Purchasers set
forth in Section 7 of this Agreement, (iii) the due
performance by the Company of the covenants and agreements set
forth in Section 5 of this Agreement, and (iv) the compliance
by the Initial Purchasers with the offering and transfer
procedures and restrictions described in the Offering
Memoranda, the offer sale and delivery of the Notes to the
Initial Purchasers in the manner contemplated by this
Agreement and the Offering Memoranda do not require
registration under the Securities Act of 1933 and the
Indentures do not require qualification under the TIA, it
being understood that we express no opinion as to any
subsequent resale of any of the Notes.
In addition, Skadden, Arps, Slate, Meagher & Flom LLP shall state
that it has participated in discussions with others and other representatives of
the Company, representatives of the independent public accountants for the
Company and you in which the contents of the Offering Memoranda and related
matters were discussed and, although such counsel is not passing upon and does
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Offering Memoranda or any documents incorporated by
reference in the Offering Memoranda and has not made any independent
verification thereof (except to the extent specified in paragraph (vii) above),
no fact has come to the attention of such counsel that leads it to believe that
the Offering Memoranda or any documents incorporated by reference in the
Offering Memoranda, as of the date of such opinion, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that such
counsel need express no opinion or belief with respect to, and need not comment
on, the financial statements, schedules or other financial data included in,
omitted from or referred to in the Offering Memoranda.
(g) You shall have received on the Closing Date and each
Option Closing Date, if any, an opinion (satisfactory to you and counsel for the
Initial Purchasers), dated the Closing Date or such Option Closing Date, as the
case may be, of Pavia Ansaldo e Verusio, Italian counsel for the Company.
(h) The Initial Purchasers shall have received on the Closing
Date an opinion, dated the Closing Date, of Latham & Watkins, counsel for the
Initial Purchasers, in form and substance reasonably satisfactory to the Initial
Purchasers.
(i) The Initial Purchasers shall have received, at the time
this Agreement is executed and at the Closing Date, letters dated the date
hereof or the Closing Date, as the case may be, in
31
<PAGE> 33
form and substance satisfactory to the Initial Purchasers from each of Ernst &
Young LLP and Coopers & Lybrand, S.a.S., independent public accountants,
containing the information and statements of the type ordinarily included in
accountants' "comfort letters" to the Initial Purchasers with respect to the
financial statements and certain financial information contained in the Offering
Memorandum.
(j) The Convertible Notes shall have been approved by the NASD
for trading and duly listed in PORTAL.
(k) The Initial Purchasers shall have received a counterpart,
conformed as executed, of each of the Indenture which shall have been entered
into by the Company, and the Discount Trustee or the Convertible Trustee, as
applicable.
(l) The Company shall have executed the Registration Rights
Agreement and the Initial Purchasers shall have received an original copy
thereof, duly executed by the Company.
(m) The tender offer for the Company's 13 1/4% Senior Discount
Notes due 2000 shall have been consummated and evidence as to such, satisfactory
to the Initial Purchasers and their counsel, shall have been delivered to the
Initial Purchasers.
(n) The Company shall not have failed at or prior to the
Closing Date to perform or comply with any of the agreements herein contained
and required to be performed or complied with by the Company, at or prior to the
Closing Date.
10. Agreement Among Initial Purchasers. Each of the Initial
Purchasers agrees, by execution of this Agreement, that the IPMA Agreement Among
Managers Version I (New York Law Version) (the "IPMA Agreement") shall be
applicable to the relationship among such Initial Purchasers in connection with
the issuance of the Discount Notes and, except as expressly specified in this
Agreement, the IPMA Recommendations shall not apply. In the event that the terms
of the IPMA Agreement are inconsistent with the terms of this Agreement, the
provisions of this Agreement shall apply. Donaldson, Lufkin & Jenrette
International and Donaldson, Lufkin & Jenrette Securities Corporation are,
together, the "Lead Manager" for purposes of the IPMA Agreement; provided,
however, that for the purposes of Section 5 (Stabilisation) of the IPMA
Agreement, Donaldson, Lufkin & Jenrette International is the "Lead Manager."
11. Effectiveness of Agreement and Termination. This Agreement shall
become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time on or prior to the
Closing Date by the Initial Purchasers by written notice to the Company if any
of the following has occurred: (i) any outbreak or escalation of hostilities or
other national or international calamity or crisis or change in economic
conditions or in the financial markets of the United States or elsewhere that,
in the Initial Purchasers' judgment, is material and adverse and, in the Initial
Purchasers' judgment, makes it impracticable to market the Series A Discount
Notes on the terms and in the manner contemplated in the Offering Memorandum,
32
<PAGE> 34
(ii) the suspension or material limitation of trading in securities or other
instruments on the New York Stock Exchange, the American Stock Exchange, the
Chicago Board of Options Exchange, the Chicago Mercantile Exchange, the Chicago
Board of Trade or the Nasdaq National Market or limitation on prices for
securities or other instruments on any such exchange or the Nasdaq National
Market, (iii) the suspension of trading of any securities of the Company on any
exchange or in the over-the-counter market, (iv) the enactment, publication,
decree or other promulgation of any federal or state statute, regulation, rule
or order of any court or other governmental authority which in your judgment
materially and adversely affects, or will materially and adversely affect, the
business, prospects, financial condition or results of operations of the Company
and its subsidiaries, taken as a whole, (v) the declaration of a banking
moratorium by either federal or New York State authorities or (vi) the taking of
any action by any federal, state or local government or agency in respect of its
monetary or fiscal affairs which in your judgment has a Material Adverse Effect
on the financial markets in the United States.
12. Miscellaneous. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (i) if to the Company, to Cellular
Communications International, Inc., 110 East 59th St., New York, New York 10022,
ATTN: Chief Financial Officer and (ii) if to the Initial Purchasers, Donaldson,
Lufkin & Jenrette Securities Corporation, 277 Park Avenue, New York, New York
10172, Attention: Syndicate Department or Wasserstein Perella Securities, Inc,
31 West 52nd Street, New York, NY 10019, Attention: General Counsel, as
applicable, or in any case to such other address as the person to be notified
may have requested in writing.
The respective indemnities, contribution agreements,
representations, warranties and other statements of the Company, and the Initial
Purchasers set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive delivery of and payment
for the Notes, regardless of (i) any investigation, or statement as to the
results thereof, made by or on behalf of the Initial Purchasers, the officers,
directors, partners and employees of the Initial Purchasers or any affiliate of
the Initial Purchasers, the Company, the officers or directors of the Company,
(ii) acceptance of the Notes and payment for them hereunder and (iii)
termination of this Agreement.
If for any reason either of the Notes are not delivered by or on
behalf of the Company as provided herein (other than as a result of any
termination of this Agreement pursuant to Section 10), the Company, jointly and
severally, agrees to reimburse the Initial Purchasers for all out-of-pocket
expenses (including the fees and disbursements of counsel) incurred by them.
Notwithstanding any termination of this Agreement, the Company shall be liable
for all expenses which it has agreed to pay pursuant to Section 5(i) hereof. The
Company also agrees to reimburse each of the Initial Purchasers and its
officers, directors, partners, employees, representatives, agents and each
person, if any, who is an affiliate of such Initial Purchaser within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act for any and all fees
and expenses (including without limitation the fees and expenses of counsel)
incurred by them in connection with enforcing their rights under this Agreement
(including without limitation its rights under Section 8).
33
<PAGE> 35
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, each of the
Initial Purchasers, such Initial Purchaser's directors and officers, any
affiliates referred to herein, the directors of the Company and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Notes from the Initial Purchasers merely because of such purchase.
This Agreement shall be governed and construed in accordance with
the laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the Initial Purchasers.
[SIGNATURE PAGES FOLLOW]
34
<PAGE> 36
Very truly yours,
CELLULAR COMMUNICATIONS INTERNATIONAL, INC.
By:/s/ Richard J. Lubasch
-------------------------
Name: RICHARD J. LUBASCH
Title: SENIOR VICE PRESIDENT & GENERAL COUNSEL
<PAGE> 37
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
By: /s/ Curtis Dickinson
------------------------
Name: CURTIS DICKINSON
Title: VICE PRESIDENT
DONALDSON, LUFKIN & JENRETTE INTERNATIONAL
By: /s/ Po Masmejean
------------------------
Name: Po Masmejean
Title: MANAGING DIRECTOR
WASSERSTEIN PERELLA SECURITIES, INC.
By:
------------------------
Name:
Title:
<PAGE> 38
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
By:
------------------------
Name:
Title:
DONALDSON, LUFKIN & JENRETTE INTERNATIONAL
By:
------------------------
Name:
Title:
WASSERSTEIN PERELLA SECURITIES, INC.
By: /s/ James C. Kingsbery
------------------------
Name: JAMES C. KINGSBERY
Title: VICE PRESIDENT
<PAGE> 39
SCHEDULE A
Principal Amount at maturity of Discount Notes
---------------------------
Initial Purchasers:
---------------------------
Donaldson, Lufkin & Jenrette
International(1)............ EURO 199,750,000
Wasserstein Perella Securities, Inc EURO 35,250,000
-----------
Total.................. EURO 235,000,000
===========
Principal Amount of Firm Notes
Initial Purchasers:
Donaldson, Lufkin & Jenrette
Securities Corporation $ 63,750,000
Wasserstein Perella Securities, Inc. $ 11,250,000
----------
Total $ 75,000,000
==========
(1) Sales made within the United States and Canada may be made through
affiliates of Donaldson, Lufkin & Jenrette International.
<PAGE> 40
SCHEDULE B
Subsidiaries
CCIL Haiti, Inc.
CCIL Mauritius, Inc.
<PAGE> 41
Execution Copy
EXHIBIT A-1
Form of Senior Discount Note Registration Rights Agreement
<PAGE> 42
EXHIBIT A-2
Form of Convertible Subordinated Note Registration Rights Agreement
<PAGE> 1
Exhibit 4.4
================================================================================
EXECUTION COPY
CELLULAR COMMUNICATIONS INTERNATIONAL, INC.
Issuer,
and
THE CHASE MANHATTAN BANK,
Trustee
-------------------------
INDENTURE
Dated as of March 18, 1998
-------------------------
$86,250,000
6% Convertible Subordinated Notes due 2005
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I. DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1. Definitions...................................................1
Section 1.2. Incorporation by Reference of TIA............................12
Section 1.3. Rules of Construction........................................12
ARTICLE II. THE NOTES
Section 2.1. Form and Dating..............................................13
Section 2.2. Execution and Authentication.................................13
Section 2.3. Registrar and Paying Agent...................................14
Section 2.4. Paying Agent to Hold Assets in Trust.........................15
Section 2.5. Noteholder Lists.............................................15
Section 2.6. Transfer and Exchange........................................15
Section 2.7. Replacement Notes............................................22
Section 2.8. Outstanding Notes............................................22
Section 2.9. Treasury Notes...............................................23
Section 2.10. Temporary Notes.............................................23
Section 2.11. Cancellation................................................23
Section 2.12. Defaulted Interest..........................................23
Section 2.13. CUSIP Numbers...............................................24
ARTICLE III. REDEMPTION
Section 3.1. Right of Redemption..........................................25
Section 3.2. Notices to Trustee...........................................25
Section 3.3. Selection of Notes to Be Redeemed............................25
Section 3.4. Notice of Redemption.........................................26
Section 3.5. Effect of Notice of Redemption...............................27
Section 3.6. Deposit of Redemption Price..................................27
Section 3.7. Notes Redeemed in Part.......................................28
ARTICLE IV. COVENANTS
Section 4.1. Payment of Notes.............................................28
Section 4.2. Maintenance of Office or Agency..............................28
Section 4.3. Corporate Existence..........................................29
Section 4.4. Payment of Taxes and Other Claims............................29
i
<PAGE> 3
Section 4.5. Maintenance of Properties and Insurance......................29
Section 4.6. Compliance Certificate; Notice of Default....................30
Section 4.7. Reports......................................................30
Section 4.8. Limitation on Status as Investment Company...................31
Section 4.9. Waiver of Stay, Extension or Usury Laws......................31
Section 4.10. Rule 144A Information Requirement...........................31
ARTICLE V. SUCCESSOR CORPORATION
Section 5.1. Limitation on Merger, Sale or Consolidation..................32
Section 5.2. Successor Corporation Substituted............................32
ARTICLE VI. EVENTS OF DEFAULT AND REMEDIES
Section 6.1. Events of Default............................................32
Section 6.2. Acceleration of Maturity, Rescission and Annulment...........34
Section 6.3. Collection of Indebtedness and Suits for Enforcement by
Trustee...................................................................36
Section 6.4. Trustee May File Proofs of Claim.............................36
Section 6.5. Trustee May Enforce Claims Without Possession of Notes.......37
Section 6.6. Priorities...................................................37
Section 6.7. Limitation on Suits..........................................38
Section 6.8. Unconditional Right of Holders to Receive Principal, Premium,
Interest and Liquidated Damages...........................................39
Section 6.9. Rights and Remedies Cumulative...............................39
Section 6.10. Delay or Omission Not Waiver................................39
Section 6.11. Control by Holders..........................................39
Section 6.12. Waiver of Past Default......................................40
Section 6.13. Undertaking for Costs.......................................40
Section 6.14. Restoration of Rights and Remedies..........................41
ARTICLE VII. TRUSTEE
Section 7.1. Duties of Trustee............................................41
Section 7.2. Rights of Trustee............................................42
Section 7.3. Individual Rights of Trustee.................................43
Section 7.4. Trustee's Disclaimer.........................................43
Section 7.5. Notice of Default............................................43
Section 7.6. Reports by Trustee to Holders................................43
Section 7.7. Compensation and Indemnity...................................44
Section 7.8. Replacement of Trustee.......................................45
Section 7.9. Successor Trustee by Merger, Etc.............................46
Section 7.10. Eligibility; Disqualification...............................46
Section 7.11. Preferential Collection of Claims Against Company...........46
ii
<PAGE> 4
Section 7.12. Other Capacities............................................46
ARTICLE VIII. SATISFACTION AND DISCHARGE
Section 8.1. Satisfaction and Discharge of Indenture......................46
Section 8.2. Repayment to the Company.....................................47
ARTICLE IX. AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1. Supplemental Indentures Without Consent of Holders...........47
Section 9.2. Amendments, Supplemental Indentures and Waivers with Consent
of Holders................................................................48
Section 9.3. Compliance with TIA..........................................49
Section 9.4. Revocation and Effect of Consents............................49
Section 9.5. Notation on or Exchange of Notes.............................50
Section 9.6. Trustee to Sign Amendments, Etc..............................50
ARTICLE X. MEETINGS OF NOTEHOLDERS
Section 10.1. Purposes for Which Meetings May Be Called...................51
Section 10.2. Manner of Calling Meetings..................................51
Section 10.3. Calling of Meetings by the Company or Holders...............51
Section 10.4. Who May Attend and Vote at Meetings.........................52
Section 10.5. Regulations May Be Made by Trustee; Conduct of the Meeting:
Voting Rights: Adjournment................................................52
Section 10.6. Voting at the Meeting and Record to Be Kept.................53
Section 10.7. Exercise of Rights of Trustee or Holders May Not Be Hindered
or Delayed by Call of Meeting.............................................53
ARTICLE XI. RIGHT TO REQUIRE REPURCHASE UPON A CHANGE OF CONTROL
Section 11.1. Repurchase of Notes at Option of the Holder Upon a Change of
Control...................................................................54
Section 11.2. Change of Control Offer Made by a Third Party...............55
ARTICLE XII. SUBORDINATION
Section 12.1. Notes Subordinated to Senior Indebtedness...................55
Section 12.2. No Payment on Notes in Certain Circumstances................55
Section 12.3. Notes Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution Liquidation or Reorganization.................57
Section 12.4. Noteholders to Be Subrogated to Rights of Holders of Senior
Indebtedness..............................................................57
Section 12.5. Obligations of the Company Unconditional....................58
Section 12.6. Trustee and Other Agents Entitled to Assume Payments Not
Prohibited in Absence of Notice...........................................58
Section 12.7. Application by Trustee of Assets Deposited with It..........59
Section 12.8. Subordination Rights Not Impaired by Acts or Omissions of
the Company or Holders of Senior Indebtedness.............................59
iii
<PAGE> 5
Section 12.9. Noteholders Authorize Trustee to Effectuate Subordination of
Notes.....................................................................59
Section 12.10. Right of Trustee to Hold Senior Indebtedness...............60
Section 12.11. Article XII Not to Prevent Events of Default...............60
Section 12.12. No Duty of Trustee and Other Agents to Holders of Senior
Indebtedness..............................................................60
ARTICLE XIII. CONVERSION OF NOTES
Section 13.1. Conversion Privilege........................................60
Section 13.2. Exercise of Conversion Privilege............................61
Section 13.3. Fractional Interests........................................62
Section 13.4. Conversion Price............................................62
Section 13.5. Adjustment of Conversion Price..............................62
Section 13.6. Continuation of Conversion Privilege in Case of
Reclassification, Change, Merger, Consolidation or Sale of Assets.........67
Section 13.7. Notice of Certain Events....................................68
Section 13.8. Taxes on Conversion.........................................69
Section 13.9. Company to Provide Stock....................................69
Section 13.10. Disclaimer of Responsibility for Certain Matters...........70
Section 13.11. Return of Funds Deposited for Redemption of
Converted Notes ..........................................................70
ARTICLE XIV. MISCELLANEOUS
Section 14.1. TIA Controls................................................70
Section 14.2. Notices.....................................................71
Section 14.3. Communications by Holders with Other Holders................72
Section 14.4. Certificate and Opinion as to Conditions Precedent..........72
Section 14.5. Statements Required in Certificate or Opinion...............72
Section 14.6. Rules by Trustee, Paying Agent, Registrar...................72
Section 14.7. Legal Holidays..............................................72
Section 14.8. Governing Law...............................................73
Section 14.9. No Adverse Interpretation of Other Agreements...............73
Section 14.10. No Recourse Against Others.................................73
Section 14.11. Successors.................................................73
Section 14.12. Duplicate Originals........................................74
Section 14.13. Severability...............................................74
Section 14.14. Table of Contents, Headings, Etc...........................74
Section 14.15. Qualification of Indenture.................................74
Section 14.16. Registration Rights........................................74
EXHIBIT A - Form of Note...................................................A-1
EXHIBIT B - Accredited Investor Letter.....................................B-1
EXHIBIT C - Form of Conversion Notice......................................C
iv
<PAGE> 6
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
- ------- -------
310(a)(1) 7.10
(a)(2) 7.10
(a)(3) N.A.
(a)(4) N.A.
(a)(5) 7.10
(b) 7.8; 7.10; 14.2
(c) N.A.
311(a) 7.11
(b) 7.11
(c) N.A.
312(a) 2.5
(b) 14.3
(c) 14.3
313(a) 7.6
(b)(1) N.A.
(b)(2) 7.6
(c) 7.6; 14.2
(d) 7.6
314(a) 4.6; 13.2
(b) N.A.
(c)(1) 2.2; 7.2; 14.4
(c)(2) 7.2; 14.4
(c)(3) N.A.
(d) N.A.
(e) 14.5
(f) N.A.
315(a) 7.1(b)
(b) 7.5; 7.6; 14.2
(c) 7.1(a)
(d) 2.8; 6.11; 7.1(b)(c)
(e) 6.13
316(a)(last sentence) 2.9
(a)(1)(A) 6.11
(a)(1)(B) 6.12
(a)(2) N.A.
(b) 6.12; 6.7
317(a)(1) 6.3
(a)(2) 6.4
(b) 2.4
v
<PAGE> 7
318(a) 14.1
- ----------
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed a part of
the Indenture.
vi
<PAGE> 8
INDENTURE, dated as of March 18, 1998, between Cellular
Communications International, Inc., a Delaware corporation (the "Company"), and
The Chase Manhattan Bank, a New York corporation, as Trustee.
Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Company's 6%
Convertible Subordinated Notes due 2005:
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1. Definitions.
"Acceleration Notice" shall have the meaning specified in Section
6.2.
"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 the Trustee and any Registrar, Paying Agent,
co-Registrar, authenticating agent or Notes Custodian.
"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,
state or foreign law for the relief of debtors.
"Beneficial Owner" for purposes of the definition of Change of
Control has the meaning attributed to it in Rules 13d-3 and 13d-5 under the
Exchange Act (as in effect on the Issue Date), whether or not applicable, except
that a "person" shall be deemed to have "beneficial ownership" of all shares
that any such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time or upon the occurrence of certain
events.
<PAGE> 9
"Board of Directors" means, with respect to any person, the Board of
Directors of such person or any committee of the Board of Directors of such
person authorized, with respect to any particular matter, to exercise the power
of the Board of Directors of such person.
"Board Resolution" means, with respect to any person, a duly adopted
resolution of the Board of Directors, or any duly authorized committee thereof,
of such person.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
"Capital Stock" means all shares, interest, 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" means such coin or currency of the United States of America
as at the time of payment shall be legal tender for the payment of public and
private debts.
"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
2
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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 Indenture 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).
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the Company's common stock, par value $.01 per
share, or as such stock may be reconstituted from time to time.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture, and thereafter means such
successor.
"Continuing Director" means at any date a member of the Company's
Board of Directors (i) who was a member of such board on the Issue Date or (ii)
who was nominated or elected by at least a majority of the directors who were
Continuing Directors at the time of such nomination or election or whose
election to the Company's Board of Directors was recommended or endorsed by at
least a majority of the directors who were Continuing Directors at the time of
such nomination or election.
"Conversion Price" shall have the meaning specified in Section 13.4.
"Conversion Shares" shall have the meaning specified in Section
13.5(1).
"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 any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Date of Conversion" shall have the meaning specified in Section
13.2.
"Default" means any event or condition that is, or after notice or
passage of time or both would be, an Event of Default.
"Defaulted Interest" shall have the meaning specified in Section
2.12.
"Definitive Notes" means Notes that are in the form of Note attached
hereto as Exhibit A that do not include the information called for by footnotes
1 and 3 thereof.
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"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the person specified in Section 2.3 as the
Depositary with respect to the Notes, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.
"Disqualified Capital 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 Notes.
"Distribution Date" shall have the meaning specified in Section
13.5(1).
"DTC" shall have the meaning specified in Section 2.3.
"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).
"Event of Default" shall have the meaning specified in Section 6.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC thereunder.
"Expiration Time" shall have the meaning specified in Section
13.5(f).
"GAAP" means United States 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 approved by a significant segment of the
accounting profession which are in effect in the United States; provided,
however, that for purposes of determining compliance with covenants in this
Indenture, "GAAP" means such generally accepted accounting principles which are
in effect as of the Issue Date.
"Global Note" means a Note that contains the paragraph referred to
in footnote 1 and the additional schedule referred to in footnote 3 to the form
of Note attached hereto as Exhibit A. There shall be separate Global Notes, with
separate CUSIP Numbers, to evidence interests (x) in the Notes held by
"qualified institutional buyers," as defined in Rule 144A under the Securities
Act, and (y) in the Notes held by persons who acquired their interest in the
Notes in compliance with Regulation S under the Securities Act.
"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
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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" or "Noteholder" means the person in whose name a Note is
registered on the Registrar's books.
"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 Capital 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 U.S. 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 in accordance with the terms hereof.
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"Initial Purchasers" means Donaldson, Lufkin & Jenrette Securities
Corporation and Wasserstein Perella Securities, Inc.
"Interest Payment Date" means the stated due date of an installment
of interest on the Notes.
"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.
"Issue Date" means the date of first issuance of the Notes under
this Indenture.
"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, or any
agreement to make any such investment or enter into any such transaction on a
future date or upon the happening of any event, 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.
"Junior Securities" means any Qualified Capital Stock and any
Indebtedness of the Company that is fully subordinated in right of payment to
the Notes and has no scheduled installment of principal due, by redemption,
sinking fund payment or otherwise, on or prior to the Stated Maturity of the
Notes.
"Last Sale Price" shall have the meaning specified in Section 13.3.
"Legal Holiday" shall have the meaning specified in Section 14.7.
"License" means the GSM license held by OPI.
"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" shall have the meaning specified in the
Registration Rights Agreement.
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"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
director 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.
"non-electing share" shall have the meaning specified in Section
13.6.
"Non-Payment Default" shall have the meaning specified in Section
12.2(b).
"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.
"Notes" means, collectively, the 6% Convertible Subordinated Notes
due 2005, as amended or supplemented from time to time in accordance with the
terms hereof, issued under this Indenture.
"Notes Custodian" means the Trustee, as custodian with respect to
the Notes in global form, or any successor entity thereto.
"Notice of Default" shall have the meaning specified in Section
6.1(3), (4) or (5).
"Offer" shall have the meaning specified in Section 13.5(f).
"Officer" means, with respect to the Company, the Chief Executive
Officer, the President, any Vice President, the Chief Financial Officer, the
Treasurer, the Controller, or the Secretary or an Assistant Secretary of the
Company.
"Officers' Certificate" means, with respect to the Company, a
certificate signed by two Officers of the Company and otherwise complying with
the requirements of Section 2.2, if applicable, and Sections 14.4 and 14.5;
provided, however, that for the purposes of Section 4.6(a), "Officers'
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<PAGE> 15
Certificate" means a certificate signed by the principal executive officer,
principal financial officer or principal accounting officer of the Company.
"Omnitel" means Omnitel-Sistemi Radiocellulari Italiani S.p.A.
"OPI" means Omnitel Pronto Italia S.p.A.
"Opinion of Counsel" means a written opinion from legal counsel who
is reasonably acceptable to the Trustee and which complies with the requirements
of Sections 14.4 and 14.5, to the extent applicable thereto.
"Paying Agent" shall have the meaning specified in Section 2.3.
"Payment Blockage Period" shall have the meaning specified in
Section 12.2(b).
"Payment Default" shall have the meaning specified in Section
12.2(a).
"Payment Notice" shall have the meaning specified in Section
12.2(b).
"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.
"Person" or "person" means any corporation, individual, limited
liability company, joint stock company, joint venture, partnership,
unincorporated association, governmental regulatory entity, country, state or
political subdivision thereof, trust, municipality or other entity.
"principal" of any Indebtedness means the principal of such
Indebtedness plus, without duplication, any applicable premium, if any, on such
Indebtedness.
"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.
"property" means any right or interest in or to property or assets
of any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
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"Purchase Agreement" means that certain Purchase Agreement, dated
March 11, 1998, by and among the Company and the Initial Purchasers, as such
agreement may be amended, modified or supplemented from time to time in
accordance with the terms thereof.
"Purchased Shares" shall have the meaning specified in Section
13.5(f).
"Qualified Capital Stock" means any Capital Stock of the Company
that is not Disqualified Capital Stock.
"Record Date" means a Record Date specified in the Notes whether or
not such Record Date is a Business Day.
"Redemption Date," when used with respect to any Note to be
redeemed, means the date fixed for such redemption pursuant to Article III of
this Indenture and Paragraph 5 in the form of Note attached hereto as Exhibit A.
"Redemption Price," when used with respect to any Note to be
redeemed, means the redemption price for such redemption pursuant to Paragraph 5
in the form of Note attached hereto as Exhibit A, which shall include, without
duplication, in each case, accrued and unpaid interest and Liquidated Damages,
if any, to and including the Redemption Date.
"Registrar" shall have the meaning specified in Section 2.3.
"Registration Rights Agreement" means the Convertible Subordinated
Note Registration Rights Agreement, dated the date hereof, by and among the
Initial Purchasers and the Company, as such agreement may be amended, modified
or supplemented from time to time in accordance with the terms thereof.
"Repurchase Date" shall have the meaning specified in Section
11.1(a).
"Repurchase Offer" shall have the meaning specified in Section
11.1(a).
"Repurchase Price" shall have the meaning specified in Section
11.1(a).
"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.
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"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 Trustee, including a copy of the Board Resolution, upon designating any
Minority Owned Affiliate as a Restricted Affiliate.
"Restricted Note" means a Note, unless or until it has been (i)
disposed of in a transaction effectively registered under the Securities Act or
(ii) distributed to the public pursuant to Rule 144 (or any similar provision
then in force) under the Securities Act.
"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.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Senior Indebtedness" means all obligations of the Company to pay
the principal of, premium, if any, interest (including all interest accruing
subsequent to the commencement of any bankruptcy or similar proceeding, whether
or not a claim for post-petition interest is allowable as a claim in any such
proceeding) and rent payable on or in connection with, and all letters of
credit, reimbursement obligations and fees, costs, expenses and other amounts
accrued or due on or in connection with, any Indebtedness of the Company,
whether outstanding on the date hereof or thereafter created, incurred, assumed,
guaranteed or in effect guaranteed by the Company, unless the instrument
creating or evidencing such Indebtedness provides that such Indebtedness is not
senior or superior in right of payment to the Notes or is pari passu with, or
subordinated to, the Notes; provided that in no event shall Senior Indebtedness
include (a) Indebtedness of the Company owed or owing to any Subsidiary of the
Company, (b) Indebtedness representing or with respect to any account payable or
other accrued current liability or obligation incurred in the ordinary course of
business in connection with the obtaining of materials or services or (c) any
liability for taxes owed or owing by the Company or any Subsidiary of the
Company.
"Shelf Registration Statement" shall have the meaning specified in
the Registration Rights Agreement.
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"Significant Subsidiary" means any Subsidiary which is a
"significant subsidiary" of the Company within the meaning of Rule 1.02(w) of
Regulation S-X promulgated by the Commission as in effect as of the Issue Date.
"Special Record Date" for payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 2.12.
"Stated Maturity," when used with respect to any Note, means April
1, 2005.
"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.
"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. Code ss.ss.
77aaa-77bbbb) as amended and as in effect on the date of the execution of this
Indenture.
"Trading Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday, other than any day on which securities are not traded on the Nasdaq
National Market (or, if the Common Stock is not listed thereon, on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading).
"Transfer Restricted Notes" means Notes that bear or are required to
bear the legend set forth in Section 2.6 hereof.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
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"Trust Officer" means any officer within the corporate trust
division (or any successor group) of the Trustee including without limitation
any vice president, assistant vice president, assistant treasurer, corporate
trust officer or any other officer or employee of the Trustee customarily
performing functions similar to those performed by the Persons who at that time
shall be such officers or employees, and also means, with respect to a
particular corporate trust matter, any other officer of the Trustee to whom such
trust matter is referred because of his knowledge of and familiarity with the
particular subject.
"Voting Stock" means the combined voting power of the then
outstanding securities entitled to vote generally in elections of directors,
managers or trustees, as applicable, of the Company or any successor entity.
"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 1.2. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such
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:
"Commission" means the SEC.
"Indenture securities" means the Notes.
"Indenture noteholder" means a Holder or a Noteholder.
"Indenture to be qualified" means this Indenture.
"Indenture trustee" or "institutional trustee" means the Trustee.
"Obligor" on the indenture securities means the Company and any
other obligor on the Notes.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them thereby.
Section 1.3. Rules of Construction.
Unless the context otherwise requires:
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<PAGE> 20
(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 words in the
plural include the singular;
(5) provisions apply to successive events and transactions;
(6) "herein," "hereof" and other words of similar import refer
to this Indenture as a whole and not to any particular Article,
Section or other subdivision; and
(7) references to Sections or Articles means reference to such
Section or Article in this Indenture, unless stated otherwise.
ARTICLE II.
THE NOTES
Section 2.1. Form and Dating.
The Notes and the Trustee's certificate of authentication, in
respect thereof, shall be substantially in the form of Exhibit A hereto, which
Exhibit is part of this Indenture. The Notes may have notations, legends or
endorsements required by law, stock exchange rule or usage. The Company shall
approve the form of the Notes and any notation, legend or endorsement on them.
Any such notations, legends or endorsements not contained in the form of Note
attached as Exhibit A hereto shall be delivered in writing to the Trustee. Each
Note shall be dated the date of its authentication.
The terms and provisions contained in the form of Notes shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, 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. If any term or provision of a Note limits, qualifies, or conflicts with
the terms of this Indenture, the terms of this Indenture shall control.
Section 2.2. Execution and Authentication.
Two Officers shall sign, or one Officer shall sign and one Officer
shall attest to, the Notes for the Company by manual or facsimile signature. The
Company's seal may be, but is not required to be, impressed, affixed, imprinted
or reproduced on the Notes and may be in facsimile form.
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<PAGE> 21
If an Officer whose signature is on a Note was an Officer at the
time of such execution but no longer holds that or any office at the time the
Trustee authenticates the Note, the Note shall be valid nevertheless and the
Company shall nevertheless be bound by the terms of the Notes and this
Indenture.
A Note shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Note but such
signature shall be conclusive evidence that the Note has been authenticated
pursuant to the terms of this Indenture.
The Trustee shall authenticate the Notes for original issue in the
aggregate principal amount of up to $86,250,000 upon a written order of the
Company in the form of an Officers' Certificate. The Officers' Certificate shall
specify (i) the amount of Notes to be authenticated and (ii) the date or dates
on which the Notes are to be authenticated. The aggregate principal amount of
Notes outstanding at any time may not exceed $86,250,000 except as provided in
Section 2.7; provided that Notes in excess of $75,000,000 shall not be issued
other than pursuant to the exercise of the over-allotment option granted by the
Company to the Initial Purchasers as provided in the Purchase Agreement. Upon
the written order or orders of the Company in the form of an Officers'
Certificate, the Trustee shall authenticate Notes in substitution of Notes
originally issued to reflect any name change of the Company.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. Unless otherwise provided in the appointment, 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 the Company, any Affiliate of the Company, or any of their
respective Subsidiaries, and has the same protections under this Indenture.
Notes shall be issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof.
Section 2.3. Registrar and Paying Agent.
The Company shall maintain an office or agency in the Borough of
Manhattan, The City of New York, 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") and where notices and demands to
or upon the Company in respect of the Notes may be served. The Company may act
as Registrar or Paying Agent, except that, for the purposes of Articles III,
VIII and XI and as otherwise specified in this Indenture, neither the Company
nor any Affiliate of the Company shall act as Paying Agent. The Registrar shall
keep a register of the Notes and of their transfer and exchange. The Company may
have one or more co-Registrars and one or more additional Paying Agents. The
term "Paying Agent" includes any additional Paying Agent. The Company hereby
initially appoints the Trustee as Registrar and Paying Agent, and the Trustee
hereby initially agrees so to act.
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<PAGE> 22
The Company shall enter into an appropriate written agency agreement
with any Agent; who is not an authenticating agent, not a party to this
Indenture, which agreement shall implement the provisions of this Indenture that
relate to such Agent. The Company shall promptly notify the Trustee in writing
of the name and address of any such Agent. If the Company fails to maintain a
Registrar or Paying Agent, the Trustee shall act as such.
The Trustee shall enter into an appropriate written agency agreement
with an authenticating agent, which agreement shall implement the provisions of
this Indenture that relate to such authenticating agent.
The Company initially appoints The Depository Trust Company ("DTC")
to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as Notes Custodian
with respect to the Global Notes.
Section 2.4. Paying Agent to Hold Assets in Trust.
The Company shall require each Paying Agent other than the Trustee
to agree in writing that each Paying Agent shall hold in trust for the benefit
of Holders or the Trustee all assets held by the Paying Agent for the payment of
principal of, premium, if any, interest on or Liquidated Damages with respect
to, the Notes (whether such assets have been distributed to it by the Company or
any other obligor on the Notes), and shall promptly notify the Trustee in
writing of any Default in making any such payment. If either of the Company or a
Subsidiary of the Company acts as Paying Agent, it shall segregate such assets
and hold them as a separate trust fund for the benefit of the Holders or the
Trustee. The Company at any time may require a Paying Agent to distribute all
assets held by it to the Trustee and account for any assets disbursed and the
Trustee may at any time during the continuance of any Payment Default, upon
written request to a Paying Agent, require such Paying Agent to distribute all
assets held by it to the Trustee and to account for any assets distributed. Upon
distribution to the Trustee of all assets that shall have been delivered by the
Company to the Paying Agent, the Paying Agent (if other than the Company or an
Affiliate of the Company) shall have no further liability for such assets.
Section 2.5. Noteholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee on or before the third Business Day preceding 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 reasonably may require of the names and
addresses of Holders.
Section 2.6. Transfer and Exchange.
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(a) Transfer and Exchange of Definitive Notes. When Definitive Notes are
presented to the Registrar or a co-Registrar with a request:
(x) to register the transfer of such Definitive Notes; or
(y) to exchange such Definitive Notes for an equal principal
amount of Definitive Notes of other authorized denominations;
the Registrar or co-Registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Notes surrendered for transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written instrument
of transfer in form reasonably satisfactory to the Company and
the Registrar or co-Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing; and
(ii) in the case of a Definitive Note that is a Transfer Restricted
Note, shall be accompanied by the following additional
information and documents, as applicable:
(A) if such Definitive Note is being delivered to the
Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect
(in substantially the form set forth on the Note); or
(B) if such Definitive Note is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities
Act, a certification to that effect (in substantially the form set
forth on the Note); or
(C) if such Definitive Note is being transferred to an
institutional investor that is an "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act,
a certification to that effect (in substantially the form set forth
on the Note) accompanied by a certificate in the form of Exhibit B
to this Indenture to the Trustee and if either the Trustee or the
Company so requests, an Opinion of Counsel satisfactory to the
Company and the Trustee to the effect that such transfer is in
compliance with the Securities Act;
(D) if such Definitive Note is being transferred in accordance
with Regulation S under the Securities Act, a certification to that
effect (in substantially the form set forth on the Note) and if
either the Trustee or the Company so requests, an Opinion of Counsel
satisfactory to the Company, the Trustee and the Registrar to the
effect that such transfer is in compliance with the Securities Act;
or
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(E) if such Definitive Note is being transferred in reliance
on another exemption from the registration requirements of the
Securities Act, a certification to that effect (in substantially the
form set forth on the Note) and if either the Trustee or the Company
so requests, an Opinion of Counsel satisfactory to the Company and
the Trustee to the effect that such transfer is in compliance with
the Securities Act.
(b) Restrictions on Transfer of a Definitive Note for a Beneficial
Interest in a Global Note. A Definitive Note may not be exchanged for a
beneficial interest in a Global Note except upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Definitive Note,
duly endorsed or accompanied by appropriate instruments of transfer in form
reasonably satisfactory to the Company and the Registrar or Co-Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing,
together with:
(i) if such Definitive Note is a Transfer Restricted Note,
certification, substantially in the form set forth on the Note, that such
Definitive Note is being transferred (x) to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act) in accordance
with Rule 144A under the Securities Act or (y) in accordance with
Regulation S under the Securities Act; and
(ii) whether or not such Definitive Note is a Transfer Restricted
Note, written instructions directing the Trustee to make, or to direct the
Notes Custodian to make, an endorsement on the Global Note to reflect an
increase in the aggregate principal amount of the Notes represented by the
applicable Global Note;
then the Trustee shall cancel such Definitive Note and cause, or direct the
Notes Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Notes Custodian, the
aggregate principal amount of Notes represented by the appropriate Global Note
to be increased accordingly. If no Global Notes are then outstanding, the
Company shall issue and the Trustee shall authenticate an appropriate new Global
Note in the appropriate principal amount.
(c) Transfer and Exchange of Global Notes. The transfer and exchange of
Global Notes or beneficial interests therein shall be effected through the
Depositary, in accordance with this Indenture (including the restrictions on
transfer set forth herein) and the procedures of the Depositary therefor.
(d) Transfer of a Beneficial Interest in a Global Note for a Definitive
Note.
(i) Upon receipt by the Trustee of written instructions or such
other form of instructions as is customary for the Depositary from the
Depositary or its nominee on behalf of any Person having a beneficial
interest in a Global Note and upon receipt by the Trustee of a written
order or such other form of instructions as is customary for the
Depositary or the Person designated by the Depositary as having such a
beneficial interest in a Transfer Restricted Note only, the following
additional information and documents shall be required to be delivered to
the Trustee (all of which may be submitted by facsimile):
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(A) if such beneficial interest is being transferred to the
Person designated by the Depositary as being the beneficial owner, a
certification from such person to that effect (in substantially the
form set forth on the Note); or
(B) if such beneficial interest is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities
Act, a certification to that effect from the transferor (in
substantially the form set forth on the Note); or
(C) if such beneficial interest is being transferred to an
institutional investor that is an "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act,
a certification to that effect (in substantially the form set forth
on the Note) accompanied by a certificate in the form of Exhibit B
to this Indenture to the Trustee and if either the Trustee or the
Company so requests, an Opinion of Counsel satisfactory to the
Company and the Trustee to the effect that such transfer is in
compliance with the Securities Act;
(D) if such beneficial interest is being transferred in
accordance with Regulation S under the Securities Act, a
certification to that effect (in substantially the form set forth on
the Note) and if either the Trustee or the Company so requests, an
Opinion of Counsel satisfactory to the Company, the Trustee and the
Registrar to the effect that such transfer is in compliance with the
Securities Act; or
(E) if such beneficial interest is being transferred in
reliance on another exemption from the registration requirements of
the Securities Act, a certification to that effect from the
transferee or transferor (in substantially the form set forth on the
Note) and if either the Trustee or the Company so requests, an
Opinion of Counsel satisfactory to the Company and the Trustee to
the effect that such transfer is in compliance with the Securities
Act;
then the Trustee or the Notes Custodian, at the direction of the Trustee, will
cause, in accordance with the standing instructions and procedures existing
between the Depositary and the Notes Custodian, the aggregate principal amount
of the applicable Global Note to be reduced and, following such reduction, the
Company will execute and, upon receipt of an authentication order in the form of
an Officers' Certificate, the Trustee will authenticate and make available for
delivery to the transferee a Definitive Note.
(i) Definitive Notes issued in exchange for a beneficial interest in
a Global Note pursuant to this Section 2.6(d) shall be registered in such
names and in such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. The Trustee shall make such Definitive Notes
available for delivery to the persons in whose names such Notes are so
registered.
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(e) Restrictions on Transfer and Exchange of Global Notes. Notwithstanding
any other provisions of this Indenture (other than the provisions set forth in
subsection (f) of this Section 2.6), a Global Note may not be transferred as a
whole except (i) by the Depositary to a nominee of the Depositary, (ii) by a
nominee of the Depositary to the Depositary or another nominee of the Depositary
or (iii) by the Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary.
(f) Authentication of Definitive Notes in Absence of Depositary. If at any
time:
(i) the Depositary for the Notes notifies the Company and the
Company notifies the Trustee in writing that the Depositary is no longer
willing or able to continue as Depositary for the Global Notes and a
successor Depositary for the Global Notes is not appointed by the Company
within 90 days after delivery of such notice; or
(ii) the Company, in its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of Definitive Notes under
this Indenture;
then the Company will execute, and the Trustee, upon receipt of an Officers'
Certificate requesting the authentication and delivery of Definitive Notes, will
authenticate and make available for delivery Definitive Notes, in an aggregate
principal amount equal to the principal amount of the Global Notes, in exchange
for such Global Notes.
(g) Legends.
(i) Except as permitted by the following paragraph (ii), each Note
certificate evidencing the Global Notes and the Definitive Notes (and all
Notes issued in exchange therefor or substitution thereof) shall bear a
legend in substantially the following form (the "Private Placement
Legend"):
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A OR
REGULATION S THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY
AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE
RESOLD,
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PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(A) INSIDE THE UNITED STATES TO
A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (B) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 904 UNDER THE SECURITIES ACT, (D) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF THE SECURITIES
ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR") THAT, PRIOR TO SUCH TRANSFER,
FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND,
IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF
SECURITIES LESS THAN $100,000, AN OPINION OF COUNSEL THAT SUCH TRANSFER IS
IN COMPLIANCE WITH THE SECURITIES ACT OR (E) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE
COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE
HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY
PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE."
(ii) Each Note certificate evidencing the Global Notes shall bear a
legend in substantially the following form (the "Global Note
Legend"):
"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 2.7 OF THE
INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART
PURSUANT TO SECTION 2.6 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."
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(iii) Upon any sale or transfer of a Transfer Restricted Note
(including any Transfer Restricted Note represented by a Global Note)
pursuant to Rule 144 under the Securities Act or an effective registration
statement under the Securities Act:
(A) in the case of any Transfer Restricted Note that is a
Definitive Note or that is represented by a Global Note, the
Registrar shall permit the Holder thereof to exchange such Transfer
Restricted Note for a Definitive Note that does not bear the legend
set forth above and rescind any restriction on the transfer of such
Transfer Restricted Note (1) in the case of a sale or transfer
pursuant to Rule 144 under the Securities Act, after delivery of a
customary Opinion of Counsel satisfactory to the Company to the
effect that such transfer is in compliance with the Securities Act
or (2) in the case of a sale or transfer pursuant to an effective
registration statement under the Securities Act; and
(B) any such Transfer Restricted Note represented by a Global
Note shall not be subject to the provisions set forth in (i) above
(such sales or transfers being subject only to the provisions of
Section 2.6(c) hereof).
(h) Cancellation and/or Adjustment of Global Note. At such time as all
beneficial interests in a Global Note have either been exchanged for Definitive
Notes, redeemed, repurchased or canceled, such Global Note shall be returned to
or retained and canceled by the Trustee. At any time prior to such cancellation,
if any beneficial interest in a Global Note is exchanged for Definitive Notes,
redeemed, repurchased or canceled, the principal amount of Notes represented by
such Global Note shall be reduced and an endorsement shall be made on such
Global Note, by the Trustee or the Notes Custodian, at the direction of the
Trustee or the Company, to reflect such reduction.
(i) Obligations with respect to Transfers and Exchanges of Definitive
Notes.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Definitive Notes and
Global Notes at the Company's or, if the Registrar and the Trustee are not
the same Person, at the Registrar's written request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax, assessments, or similar governmental
charge payable in connection therewith (other than any such transfer
taxes, assessments, or similar governmental charge payable upon exchanges
or transfers pursuant to Section 2.2 (fourth paragraph), 2.10, 3.7, 9.5,
or 11.1 (final paragraph)).
(iii) The Registrar or co-Registrar shall not be required to
register the transfer of or exchange of (a) any Definitive Note selected
for redemption in whole or in part pursuant to Article III, except the
unredeemed portion of any Definitive Note being redeemed in part, or (b)
any Note for a period beginning 15 days before the mailing of a notice of
an offer to repurchase
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pursuant to Article XI hereof or the mailing of a notice of redemption of
Notes pursuant to Article III hereof and ending at the close of business
on the day of such mailing.
Section 2.7. Replacement Notes.
If a mutilated Note is surrendered to the Trustee or if the Holder
of a Note claims and submits an affidavit or other evidence, satisfactory to the
Trustee, to the Trustee to the effect that the Note has been lost, destroyed or
stolen, the Company shall issue and the Trustee shall authenticate a replacement
Note if the Trustee's requirements are met. Such Holder must provide an
indemnity bond or other indemnity, sufficient in the judgment of both the
Company and the Trustee, to protect the Company, the Trustee or any Agent from
any loss which any of them may suffer if a Note is replaced. The Company may
charge such Holder for its reasonable, out-of-pocket expenses in replacing a
Note.
In case any such mutilated, destroyed, lost or stolen Note has
become or is about to become due and payable, the Company in its discretion, but
subject to any conversion rights, may, instead of issuing a new Note, pay such
Note, upon satisfaction of the conditions set forth in the preceding paragraph.
Every new Note issued pursuant to this Section 2.7 in lieu of any
mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
such new Note shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section 2.7 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies of any Holder with respect
to the replacement or payment of mutilated, destroyed, lost or stolen Notes.
Section 2.8. Outstanding Notes.
Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee (including any Note represented by a Global Note)
except those canceled by it, those delivered to it for cancellation, those
reductions in the interest in a Global Note effected by the Trustee hereunder,
those paid pursuant to Section 2.7 and those described in this Section 2.8 as
not outstanding. A Note does not cease to be outstanding because the Company or
an Affiliate of the Company holds the Note, except as provided in Section 2.9.
If a Note is replaced pursuant to Section 2.7 (other than a
mutilated Note surrendered for replacement), the replaced Note ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser. A mutilated Note ceases to be
outstanding upon surrender of such Note and replacement thereof pursuant to
Section 2.7.
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If on a Redemption Date the Paying Agent (other than the Company or
an Affiliate of the Company) holds Cash sufficient to pay all of the principal
and interest due on the Notes payable on that date in accordance with Section
3.6 hereof and payment of the Notes called for redemption is not otherwise
prohibited pursuant to Article XII hereof or otherwise, then on and after that
date such Notes cease to be outstanding and interest on them ceases to accrue.
Section 2.9. Treasury Notes.
In determining whether the Holders of the required principal amount
of Notes have concurred in any direction, amendment, supplement, waiver or
consent, Notes owned by the Company or an Affiliate of the Company shall be
disregarded, except that, for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, amendment, supplement,
waiver or consent, only Notes that a Trust Officer of the Trustee actually knows
are so owned shall be disregarded.
Section 2.10. Temporary Notes.
Until Definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes. Temporary Notes
shall be substantially in the form of Definitive Notes but may have variations
that the Company reasonably and in good faith considers appropriate for
temporary Notes. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate Definitive Notes in exchange for temporary Notes.
Until so exchanged, the temporary Notes shall in all respects be entitled to the
same benefits under this Indenture as permanent Notes authenticated and
delivered hereunder.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for transfer, exchange or payment. The Trustee, or
at the direction of the Trustee, the Registrar or the Paying Agent (other than
the Company or an Affiliate of the Company), and no one else, shall cancel and
return all Notes surrendered for transfer, exchange, payment or cancellation.
All canceled Notes held by the Trustee shall be destroyed and certification of
their destruction delivered to the Company unless by an Officers' Certificate of
the Company, the Company shall direct that the canceled Notes be returned to the
Company. Subject to Section 2.7, the Company may not issue new Notes to replace
Notes that have been paid or delivered to the Trustee for cancellation. No Notes
shall be authenticated in lieu of or in exchange for any Notes canceled as
provided in this Section 2.11, except as expressly permitted in the form of
Notes and as permitted by this Indenture.
Section 2.12. Defaulted Interest.
Interest on any Note which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the person in
whose name that Note (or one or more predecessor Notes) is registered at the
close of business on the Record Date for such interest.
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Any interest on any Note which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date plus, to the extent
lawful, any interest payable on the defaulted interest (collectively, herein
called "Defaulted Interest") shall forthwith cease to be payable to the
registered holder on the relevant Record Date, and such Defaulted Interest may
be paid by the Company, at its election in each case, as provided in clause (1)
or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the persons in whose names the Notes (or their respective predecessor
Notes) are registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest, which shall be fixed in the
following manner. 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, and at the same time the Company shall deposit
with the Trustee an amount of Cash equal to the aggregate amount proposed
to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the
date of the proposed payment, such Cash when deposited to be held in trust
for the benefit of the persons entitled to such Defaulted Interest as
provided in this clause (1). Thereupon the Trustee shall fix a special
record date for the payment of such Defaulted Interest which shall be not
more than 15 Business Days and not less than 10 Business Days prior to the
date of the proposed payment and not less than 10 Business Days after the
receipt by the Trustee of the notice of the proposed payment ("Special
Record Date"). The Trustee shall promptly notify the Company in writing of
such Special Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first-class
postage prepaid, to each Holder at his address as it appears in the Note
register not less than 10 Business Days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor having been mailed as aforesaid, such Defaulted
Interest shall be paid to the persons in whose names the Notes (or their
respective predecessor Notes) are registered on such Special Record Date
and shall no longer be payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, if, after written notice given by the
Company to the Trustee of the proposed payment pursuant to this clause,
such manner shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 2.12, each Note
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Note shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Note.
Section 2.13. CUSIP Numbers.
The Company in issuing the Notes may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to the
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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" numbers.
ARTICLE III.
REDEMPTION
Section 3.1. Right of Redemption.
Redemption of Notes, as permitted by any provision of this
Indenture, shall be made in accordance with Paragraph 5 of the Notes and this
Article III. The Company will not have the right to redeem any Notes prior to
April 4, 2001. On or after April 4, 2001, the Company will have the right to
redeem all or any part of the Notes at the Redemption Prices specified in
Paragraph 5 therein, in each case including accrued and unpaid interest and
Liquidated Damages, if any, to, but excluding, the Redemption Date. Payments in
respect of the Notes on redemption by the Company are subject to the
subordination provisions set forth in Article XII.
Section 3.2. Notices to Trustee.
If the Company elects to redeem Notes pursuant to Paragraph 5 of the
Notes, it shall notify the Trustee in writing of the Redemption Date, the
principal amount of Notes to be redeemed, the Redemption Price and whether it
wants the Trustee to give notice of redemption to the Holders.
The Company shall give each notice to the Trustee provided for in
this Section 3.2 at least 45 days but not more than 60 days before the
Redemption Date (unless a shorter notice period shall be satisfactory to the
Trustee). Any such notice may be canceled at any time prior to notice of such
redemption being mailed to any Holder and shall thereby be void and of no
effect.
Section 3.3. Selection of Notes to Be Redeemed.
If less than all of the Notes are to be redeemed pursuant to
Paragraph 5 thereof, the Trustee shall select the Notes to be redeemed on a pro
rata basis, by lot or by such other method as the Trustee shall determine to be
fair and appropriate and in such manner as complies with any applicable
depositary, legal and stock exchange or automated quotation system requirements.
The Trustee shall make the selection from the Notes outstanding and
not previously called for redemption and 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
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be redeemed. Notes in denominations of $1,000 may be redeemed only in whole. The
Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Notes that have denominations larger than
$1,000. Provisions of this Indenture that apply to Notes called for redemption
also apply to portions of Notes called for redemption.
Section 3.4. Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first-class mail, postage
prepaid, to the Trustee and each Holder whose Notes are to be redeemed at such
Holder's address as it appears on the security register maintained by the
Registrar. At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. Each notice of
redemption shall identify the Notes to be redeemed and shall state:
(1) the Redemption Date, and that the Notes called for
redemption may not be converted after the Business Day immediately
prior to the Redemption Date;
(2) the Redemption Price, including the amount of accrued and
unpaid interest and Liquidated Damages, if any, to be paid upon such
redemption;
(3) the name, address and telephone number of the Paying
Agent;
(4) that Notes called for redemption must be surrendered to
the Paying Agent at the address specified in such notice to collect
the Redemption Price;
(5) that, unless (a) the Company defaults in its obligation to
deposit Cash with the Paying Agent in accordance with Section 3.6
hereof or (b) such redemption payment is prohibited pursuant to
Article XII hereof or otherwise, interest on, and Liquidated Damages
with respect to, Notes called for redemption ceases to accrue on and
after the Redemption Date and the only remaining right of the
Holders of such Notes is to receive payment of the Redemption Price,
including accrued and unpaid interest and Liquidated Damages, if
any, to, but excluding the Redemption Date, upon surrender to the
Paying Agent of the Notes called for redemption and to be redeemed;
(6) if any Note is being redeemed in part, the portion of the
principal amount, equal to $1,000 or any integral multiple thereof,
of such Note to be redeemed and that, on or after the Redemption
Date, upon surrender of such Note, a new Note or Notes in aggregate
principal amount equal to the unredeemed portion thereof will be
issued;
(7) if less than all the Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be
redeemed, as well as the aggregate principal amount of such Notes to
be redeemed;
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(8) the CUSIP number of the Notes to be redeemed; and
(9) that the notice is being sent pursuant to this Section 3.4
and pursuant to the redemption provisions of Paragraph 5 of the
Notes.
Section 3.5. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.4,
Notes called for redemption become due and payable on the Redemption Date and at
the Redemption Price, including accrued and unpaid interest and Liquidated
Damages, if any, to the Redemption Date. Upon surrender to the Trustee or Paying
Agent, such Notes called for redemption shall be paid at the Redemption Price,
including accrued and unpaid interest and Liquidated Damages, if any, to the
Redemption Date; provided that if the Redemption Date is after a regular Record
Date and on or prior to the corresponding Interest Payment Date, the accrued
interest and Liquidated Damages, if any, shall be payable to the Holder of the
redeemed Notes registered on the relevant Record Date; and provided, further,
that if a Redemption Date is a Legal Holiday, payment shall be made on the next
succeeding Business Day and no interest or Liquidated Damages shall accrue for
the period from such Redemption Date to such succeeding Business Day.
Section 3.6. Deposit of Redemption Price.
On or prior to the Redemption Date, the Company shall deposit with
the Paying Agent (other than the Company or an Affiliate of the Company) Cash
sufficient to pay the Redemption Price of, including accrued and unpaid interest
on, and Liquidated Damages, if any, with respect to, all Notes to be redeemed on
such Redemption Date (other than Notes or portions thereof called for redemption
on that date that have been delivered by the Company to the Trustee for
cancellation). The Paying Agent shall promptly return to the Company any Cash so
deposited which is not required for that purpose upon the written request of the
Company.
If the Company complies with the preceding paragraph and the other
provisions of this Article III and payment of the Notes called for redemption is
not prohibited under Article XII or otherwise, interest and Liquidated Damages,
if any, on the Notes to be redeemed will cease to accrue on and after the
applicable Redemption Date, whether or not such Notes are presented for payment.
Notwithstanding anything herein to the contrary, if any Note surrendered for
redemption in the manner provided in the Notes shall not be so paid upon
surrender for redemption because of the failure of the Company to comply with
the preceding paragraph, Liquidated Damages shall continue to accrue and be paid
from the Redemption Date if so required pursuant to Section 3 of the
Registration Rights Agreement and interest shall continue to accrue and be paid
from the Redemption Date until such payment is made on the unpaid principal,
and, to the extent lawful, on any interest not paid on such unpaid principal, in
each case at the rate and in the manner provided in Section 4.1 hereof and the
Note.
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Section 3.7. Notes Redeemed in Part.
Upon surrender of a Note that is to be redeemed in part, the Company
shall execute and the Trustee shall thereafter authenticate and make available
for delivery to the Holder, without service charge to the Holder, a new Note or
Notes equal in principal amount to the unredeemed portion of the Note
surrendered.
ARTICLE IV.
COVENANTS
Section 4.1. Payment of Notes.
The Company shall pay the principal of, interest on, and Liquidated
Damages with respect to, the Notes on the dates and in the manner provided in
the Notes and the Registration Rights Agreement, as applicable. An installment
of principal of, interest on, or Liquidated Damages with respect to, the Notes
shall be considered paid on the date it is due if the Trustee or Paying Agent
(other than the Company or an Affiliate of the Company) holds for the benefit of
the Holders, on or before 12:00 noon New York City time on that date, Cash
deposited and designated for and sufficient to pay the installment.
The Company shall pay interest on overdue principal and on overdue
installments of interest at the rate specified in the Notes compounded
semi-annually, to the extent lawful.
Section 4.2. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, The City of
New York, an office or agency where Notes may be presented or surrendered for
payment, where Notes may be surrendered for registration of transfer or exchange
and for conversion 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 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 address of the Trustee set forth in Section 14.2.
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, for such purposes. The Company shall give prior
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office
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or agency. The Company hereby initially designates the principal corporate trust
office in New York City of the Trustee as such office.
Section 4.3. Corporate Existence.
Subject to Article V, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence and the corporate or other existence of each of its Subsidiaries in
accordance with the respective organizational documents of each of them and the
rights (charter and statutory) and corporate franchises of the Company and each
of its Subsidiaries; provided, however, that the Company shall not be required
to preserve, with respect to itself, any right or franchise, and with respect to
any of its Subsidiaries, any such existence, right or franchise, if (a) the
Company shall, in good faith, reasonably determine that the preservation thereof
is no longer desirable in the conduct of the business of such entity and (b) the
loss thereof is not disadvantageous in any material respect to the Holders.
Section 4.4. Payment of Taxes and Other Claims.
Except with respect to items that are not material to the Company
and its Subsidiaries taken as a whole, the Company shall, and shall cause each
of its Subsidiaries to, pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon the Company or any of its
Subsidiaries or any of their respective properties and assets and (ii) all
lawful claims, whether for labor, materials, supplies, services or anything
else, which have become due and payable and which by law have or may become a
Lien upon the property and assets of the Company or any of its Subsidiaries;
provided, however, that neither the Company nor any Subsidiary shall be required
to pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings and for which disputed amounts adequate
reserves have been established in accordance with GAAP.
Section 4.5. Maintenance of Properties and Insurance.
The Company shall cause all material properties used or useful to the
conduct of its business and the business of each of its Subsidiaries to be
maintained and kept in good condition, repair and working order (reasonable wear
and tear excepted) and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in its reasonable
judgment may be necessary, so that the business carried on in connection
therewith may be properly conducted at all times; provided, however, that
nothing in this Section 4.5 shall prevent the Company or any Subsidiary from
discontinuing the operation or maintenance of any of such properties, if such
discontinuance is (a) in the judgment of the Company, desirable in the conduct
of the business of such entity and (b) not disadvantageous in any material
respect to the Holders.
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The Company shall provide, or cause to be provided, for itself and
each of its Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds that, in the reasonable, good faith opinion
of the Company, is adequate and appropriate for the conduct of the business of
the Company and such Subsidiaries in a prudent manner, with (except for
self-insurance) reputable insurers or with the government of the United States
of America or an agency or instrumentality thereof, in such amounts, with such
deductibles, and by such methods as shall be customary, in the reasonable, good
faith opinion of the Company, and adequate and appropriate for the conduct of
the business of the Company and such Subsidiaries in a prudent manner for
entities similarly situated in the industry, unless failure to provide such
insurance (together with all other such failures) would not have a material
adverse effect on the financial condition or results of operations of the
Company and its Subsidiaries taken as a whole.
Section 4.6. Compliance Certificate; Notice of Default.
(a) The Company shall deliver to the Trustee within 120 days after
the end of the Company's fiscal year (with such fiscal year as of the date
hereof ending on December 31) an Officers' Certificate complying with Section
314(a)(4) of the TIA and stating that a review of its activities and the
activities of its Subsidiaries during the preceding fiscal year has been made
under the supervision of the signing Officer 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, whether or not the signer knows of any failure by the Company or
any Subsidiary of the Company to comply with any conditions or covenants in this
Indenture and, if such signer does know of such a failure to comply, the
certificate shall describe such failure with particularity. The Officers'
Certificate shall also notify the Trustee should the relevant fiscal year end on
any date other than the current fiscal year end date.
(b) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, promptly upon the Company becoming aware of (and in any
event within five days after the Company becomes aware of) any Default, Event of
Default or fact which would prohibit the making of any payment to or by the
Trustee in respect of the Notes, an Officers' Certificate specifying such
Default, Event of Default or fact and what action the Company is taking or
proposes to take with respect thereto. The Trustee shall not be deemed to have
knowledge of any Default, any Event of Default or any such fact unless one of
its Trust Officers receives notice thereof from the Company or any of the
Holders.
Section 4.7. Reports.
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 (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
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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
effectiveness of a shelf registration statement as 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 (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).
Section 4.8. Limitation on Status as Investment Company.
The Company shall not, and shall not permit any Restricted
Subsidiary of the Company 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 4.9. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law or any
usury law or other law which would prohibit or forgive the Company from paying
all or any portion of the principal of, premium of, interest on, or Liquidated
Damages with respect to, the Notes as contemplated herein, wherever enacted, now
or at any time hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that it may lawfully do so)
the Company hereby expressly waives all benefit or advantage of any such law,
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
Section 4.10. Rule 144A Information Requirement.
If at any time there are Transfer Restricted Notes outstanding and
the Company shall cease to have a class of equity securities registered under
Section 12(b) of the Exchange Act or shall cease to be subject to Section 15(d)
of the Exchange Act, the Company shall furnish, within a reasonable period of
time, to the Holders or beneficial holders of the Notes or the underlying Common
Stock and prospective purchasers of Notes or the underlying Common Stock
designated by the Holders of Transfer Restricted Notes, upon their written
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act until such time as the Shelf Registration Statement has
become effective under the Securities Act. The Company shall also furnish such
information during the pendency of any suspension of effectiveness of the Shelf
Registration Statement.
ARTICLE V.
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SUCCESSOR CORPORATION
Section 5.1. Limitation on Merger, Sale or Consolidation.
(a) The Company shall not consolidate or merge with or into (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 to another corporation, person or
entity 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 such 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 such sale, assignment, transfer, lease, conveyance or other disposition
will have been made assumes all of the obligations of the Company under the
Registration Rights Agreement, the Notes and this Indenture; pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee and
(iii) immediately after such transaction no Default or Event of Default exists.
(b) For purposes of clause (a) of this Section 5.1 and Section 13.6,
the sale, lease, conveyance, assignment, transfer, or other disposition of all
or substantially all of the properties and assets of one or more Subsidiaries of
the Company, which properties and assets, if held by the Company instead of such
Subsidiaries, would constitute all or substantially all of the properties and
assets of the Company on a consolidated basis, shall be deemed to be the
transfer of all or substantially all of the properties and assets of the
Company.
Section 5.2. Successor Corporation Substituted.
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Company in accordance with the foregoing,
the successor corporation formed by such consolidation or into which the Company
is merged or to which such transfer is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this Indenture
with the same effect as if such successor corporation had been named therein as
the Company, and the Company thereafter will be released from its obligations
under this Indenture and the Notes, except as to any obligations that arise from
or as a result of such transaction.
ARTICLE VI.
EVENTS OF DEFAULT AND REMEDIES
Section 6.1. Events of Default.
"Event of Default," wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
caused voluntarily or involuntarily
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or effected, without limitation, by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) failure to pay any installment of interest on, or
Liquidated Damages with respect to, the Notes when the same becomes
due and payable and the continuance of such failure for a period of
30 days, whether or not such payment is prohibited by Article XII;
(2) default in payment when due of the principal of,
Liquidated Damages, if any, on the Notes at maturity, upon
acceleration, repurchase or otherwise;
(3) 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 Section 11.1 hereof;
(4) failure by the Company or any Restricted Subsidiary of the
Company, Restricted Affiliate or Restricted Subsidiary of or
Restricted Affiliate to comply with any other covenant or agreement
contained in the Notes or this Indenture and, the continuance of
such failure for a period of 60 days after written notice is given
to the Company by the Trustee or to the Company and the Trustee by
Holders of at least 25% in aggregate principal amount of the Notes
outstanding;
(5) 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 hereof, 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 on the date of such default (or, in the case of
Omnitel or OPI, within 30 days from such date) (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);
(6) 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 Omintel 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);
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(7) 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;
(8) 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:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against
it in an involuntary case,
(C) consents to the appointment of a Custodian of it or
for all or substantially all of its property,
(D) makes a general assignment for the benefit of its
creditors, or
(E) generally is not paying its debts as they become
due; or
(9) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law or other similar laws that:
(A) 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;
(B) 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
(C) orders the liquidation of the Company or any of its
Restricted Subsidiaries, Restricted Affiliates or Restricted
Subsidiaries of Restricted Affiliates or Omnitel or OPI;
and the order or decree remains unstayed and in effect for 60 consecutive
days.
Section 6.2. Acceleration of Maturity, Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 6.1(8) or (9) relating to the Company, any Restricted Subsidiaries,
Restricted Affiliates or Restricted Subsidiaries of
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Restricted Affiliates or Omnitel or OPI) occurs and is continuing, then in every
such case, unless the principal of all of the Notes shall have already become
due and payable, either the Trustee or the Holders of not less than 25% in
aggregate principal amount of then outstanding Notes, by a notice in writing to
the Company (and to the Trustee if given by Holders) (an "Acceleration Notice"),
may declare all of the principal of the Notes (or the Repurchase Price if the
Event of Default includes failure to pay the Repurchase Price, determined as set
forth below), including in each case premium, if any, accrued interest and
Liquidated Damages on or with respect thereto, to be due and payable
immediately. If an Event of Default specified in Section 6.1(8) or (9) relating
to the Company, any Restricted Subsidiaries, Restricted Affiliates or Restricted
Subsidiaries of Restricted Affiliates or Omnitel or OPI occurs, all principal,
premium, if any, accrued interest and Liquidated Damages on or with respect
thereto will be immediately due and payable on all outstanding Notes without any
declaration or other act on the part of the Trustee or the Holders.
If an Event of Default occurs on or after April 4, 2001 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 3.1 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 4, 2001
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 3.1 hereof had the Notes been redeemed on the year after April 4, 2001.
Holders of not less than a majority in aggregate principal amount at
maturity of the Notes then outstanding, 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, if any, or interest on, the Notes (which would be required
to be unanimous), 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.
Notwithstanding the previous sentence of this Section 6.2, no waiver
shall be effective against any Holder for any Event of Default or event which
with notice or lapse of time or both would be an Event of Default with respect
to any covenant or provision which cannot be modified or amended without the
consent of the Holder of each outstanding Note affected thereby, unless all such
affected Holders agree, in writing, to waive such Event of Default or
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other event. No such waiver shall cure or waive any subsequent Default or Event
of Default or impair any right consequent thereon.
Section 6.3. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if an Event of Default in payment of
principal, premium, interest or Liquidated Damages specified in clause (1) or
(2) of Section 6.1 occurs and is continuing, the Company shall, upon demand of
the Trustee, pay to it, for the benefit of the Holders of such Notes, the whole
amount then due and payable on such Notes for principal, premium (if any),
interest, Liquidated Damages and, to the extent that payment of such interest
shall be legally enforceable, interest on any overdue principal (and premium, if
any), Liquidated Damages and on any overdue interest, at the rate borne by the
Notes, and, in addition thereto, such further amount as shall be sufficient to
cover the costs, fees and expenses of collection, including compensation to, and
expenses, disbursements and advances of, the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust in favor of the
Holders, may at the expense of the Company institute a judicial proceeding for
the collection of the sums so due and unpaid, may at the expense of the Company
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Notes and collect the moneys
adjudged or decreed to be payable in the manner provided by law out of the
property of the Company or any other obligor upon the Notes, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
Section 6.4. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor upon the
Notes or the property of the Company or of such other obligor or their
creditors, the Trustee (which term as used in this Section shall include any
predecessor Trustee) (irrespective of whether the principal of the Notes shall
then be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Company
for the payment of overdue principal, interest or Liquidated Damages) shall be
entitled and empowered, by intervention in such proceeding or otherwise, to take
any and all actions under the TIA, including
(1) to file and prove a claim for the whole amount of principal (and
premium, if any), interest and Liquidated Damages owing and unpaid in
respect of the Notes and to file such
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other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim under Section 7.7 for
the compensation, fees, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Holders allowed in such
judicial proceeding, and
(2) To collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same in accordance
with Section 6.6;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official 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 it for the compensation, expenses, fees,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.7. To the extent that the payment of
such compensation, expenses, fees, disbursements and advances of Trustee, its
agents and counsel and any other amounts due to the Trustee under Section 7.7
hereof out of the estate in any such judicial proceeding shall be denied for any
reason, payment of the same shall be secured by a perfected first priority
security interest in and 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, and any such
security interest and lien in favor of any predecessor Trustee shall be senior
to the security interest and lien in favor of the current Trustee.
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 thereof or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
Section 6.5. 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 6.6. Priorities.
Any money collected by the Trustee pursuant to this Article VI shall
be applied in the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of such money on account of principal, premium
(if any), interest or Liquidated Damages, upon presentation of the
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Notes and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
FIRST: To the Trustee (including any predecessor Trustee) in payment
of all amounts due pursuant to Section 7.7;
SECOND: To the holders of Senior Indebtedness of the Company to the
extent provided in Article XII;
THIRD: To the Holders in payment of the amounts then due and unpaid
for principal of, premium (if any), interest on and Liquidated Damages
with respect to, the Notes in respect or for the benefit of which such
money has been collected, ratably, without preference or priority of any
kind, according to the amounts due and payable on such Notes for
principal, premium (if any), interest and Liquidated Damages,
respectively; and
FOURTH: To the Company, the remainder, if any.
Section 6.7. Limitation on Suits.
No Holder of any Note shall have any right to order or direct the
Trustee to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(A) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(B) the Holders of not less than 25% in principal amount of then
outstanding Notes shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(C) such Holder or Holders have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities to be
incurred or reasonably probable to be incurred in compliance with such
request;
(D) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(E) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of then outstanding Notes;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice
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the rights of any other Holders, or to obtain or to seek to obtain priority or
preference over any other Holders or to enforce any right under this Indenture,
except in the manner herein provided and for the equal and ratable benefit of
all the Holders.
Section 6.8. Unconditional Right of Holders to Receive Principal, Premium,
Interest and Liquidated Damages.
Notwithstanding any other provision of this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of, and premium (if any), interest on and Liquidated
Damages with respect to, such Note when due (including, in the case of
redemption, the Redemption Price on the applicable Redemption Date, and in the
case of the Repurchase Price, on the applicable Repurchase Date), to convert
such Note in accordance with Article XIII, and to institute suit for the
enforcement of any such payment and right to convert after such respective
dates, and such rights shall not be impaired without the consent of such Holder.
Section 6.9. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes in Section 2.7, 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.
Section 6.10. Delay or Omission Not Waiver.
No delay or omission by the Trustee or by any Holder of any Note to
exercise any right or remedy arising upon any Event of Default shall impair the
exercise of any such right or remedy or constitute a waiver of any such Event of
Default. Every right and remedy given by this Article VI or by law to the
Trustee or to the Holders may be exercised from time to time, and as often as
may be deemed expedient, by the Trustee or by the Holders, as the case may be.
Section 6.11. Control by Holders.
The Holder or Holders of no less than a majority in aggregate
principal amount of then outstanding Notes shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred upon the Trustee,
provided, that
(A) such direction shall be made in writing to the Trustee and shall
not be in conflict with any rule of law or with this Indenture or expose
the Trustee to personal liability,
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(B) the Trustee shall not determine that the action so directed
would be unjustly prejudicial to the Holders not taking part in such
written direction, and
(C) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such written direction.
Section 6.12. Waiver of Past Default.
The Holder or Holders of not less than a majority in aggregate
principal amount of then outstanding Notes may, on behalf of all Holders, prior
to the declaration of acceleration of the maturity of the Notes, waive any past
default hereunder and its consequences, except a default
(A) in the payment of the principal of, premium, if any,
interest on, or Liquidated Damages with respect to, any Note not yet
cured as specified in clauses (1) and (2) of Section 6.1, or
(B) in respect of a covenant or provision hereof which, under
Article IX, cannot be modified or amended without the consent of the
Holder of each outstanding Note affected.
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 the exercise of any right arising therefrom.
Section 6.13. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Note by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, 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,
suffered or omitted to be taken by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 6.13 shall not apply to any suit instituted
by the Company, to any suit instituted by the Trustee, to any suit instituted by
any Holder, or group of Holders, holding in the aggregate more than 10% in
aggregate principal amount of then outstanding Notes, or to any suit instituted
by any Holder for enforcement of the payment of principal of, premium (if any),
interest on or Liquidated Damages with respect to, any Note on or after the
respective Stated Maturity of such Note (including, in the case of redemption,
on or after the Redemption Date).
Section 6.14. Restoration of Rights and Remedies.
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If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, then and in every case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
ARTICLE VII.
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this
Indenture and covenants and agrees to perform the same, as herein expressed.
Section 7.1. 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
(1) 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
(2) 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:
(1) this paragraph does not limit the effect of paragraph (b) of this
Section;
(2) 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
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(3) the Trustee shall not be liable with respect to any action it takes or
omits to take in good faith in accordance with a direction received by it
pursuant to Section 6.5 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 7.2. Rights of Trustee.
Subject to Section 7.1:
(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.
(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.
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Section 7.3. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company, any of its
Subsidiaries, or their respective Affiliates with the same rights it would have
if it were not Trustee. Any Agent may do the same with like rights. However, the
Trustee must comply with Sections 7.10 and 7.11.
Section 7.4. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy
of this Indenture, the Registration Rights Agreement, the Offering Memorandum or
the Notes and it shall not be accountable for the Company's use of the proceeds
from the Notes, and it shall not be responsible for any statement in the Notes,
other than the Trustee's certificate of authentication, or the use or
application of any funds received by a Paying Agent other than the Trustee.
Section 7.5. Notice of Default.
If a Default or an Event of Default occurs and is continuing and if
it is actually known to the Trustee, the Trustee shall mail to each Noteholder
notice of the uncured Default or Event of Default within 90 days after the later
to occur of (i) the occurrence of such Default or Event of Default or (ii) the
date the Trustee becomes aware of such Default or Event of Default. Except in
the case of a Default or an Event of Default in payment of principal (or
premium, if any) of, interest on or Liquidated Damages with respect to, any Note
(including the payment of the Repurchase Price on the Repurchase Date and the
payment of the Redemption Price on the Redemption Date), the Trustee may
withhold the notice if and so long as a committee of Trust Officers in good
faith determines that withholding the notice is in the interest of the
Noteholders.
Section 7.6. Reports by Trustee to Holders.
Within 90 days after each May 15 beginning with the May 15 following
the date of this Indenture, the Trustee shall, if required by law, mail to each
Noteholder a brief report dated as of such May 15 that complies with TIA ss.
313(a). The Trustee also shall comply with TIA ss.ss. 313(b) and 313(c).
The Company shall promptly notify the Trustee in writing if the
Notes become listed on any stock exchange or automatic quotation system or
become delisted therefrom.
A copy of each report at the time of its mailing to Noteholders
shall be mailed to the Company and, if required, filed with the SEC and each
stock exchange, if any, on which the Notes are listed.
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Section 7.7. Compensation and Indemnity.
The Company agrees to pay to the Trustee from time to time such
compensation for its services as the parties shall agree in writing from time to
time and, in the absence of such agreement, 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 upon request for all such
disbursements, expenses, fees and advances incurred or made by it. Such expenses
shall include the reasonable compensation, disbursements, fees and expenses of
the Trustee's agents, accountants, experts and counsel.
The Company agrees to indemnify each of the Trustee and any
predecessor Trustee (in its capacity as Trustee) and each of its officers,
directors, attorneys-in-fact and agents for, and hold them harmless against, any
and all claims, demands, expenses (including but not limited to reasonable
compensation, fees, disbursements and expenses of the Trustee's agents and
counsel and taxes (other than taxes based on the income of the Trustee)), loss,
damages or liability incurred by it without negligence, bad faith or willful
misconduct on its part, arising out of, related to, or in connection with the
acceptance or administration of this trust and its rights or duties hereunder
including the reasonable costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder.
To secure the Company's payment obligations in this Section 7.7, the
Trustee and each predecessor Trustee shall have a perfected lien prior to the
Notes on all assets held or collected by the Trustee, in its capacity as
Trustee, except assets held in trust for the benefit of the Holders to pay
principal and premium, if any, of or interest or Liquidated Damages on
particular Notes. Any lien in favor of a predecessor Trustee shall be senior to
any lien in favor of the current Trustee.
When the Trustee or any predecessor Trustee incurs expenses or fees
or renders services after an Event of Default specified in Section 6.1(8) or (9)
occurs, the expenses and the compensation for the services are intended to
constitute expenses of administration under any Bankruptcy Law.
The Company's obligations under this Section 7.7 and any lien
arising hereunder shall survive indefinitely, including upon the resignation or
removal of the Trustee, the discharge of the Company's obligations pursuant to
Article VIII of this Indenture and any rejection or termination of this
Indenture under any Bankruptcy Law.
Section 7.8. Replacement of Trustee.
The Trustee may resign by so notifying the Company in writing. The
Holder or Holders of a majority in principal amount of then outstanding Notes
may remove the Trustee by so notifying the Company and the Trustee in writing.
The Company, by Board Resolution, may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
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(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver, Custodian, or other public officer takes
charge of the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of this Section 7.8.
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 Holder or
Holders of a majority in principal amount of then outstanding Notes may, with
the Company's consent, appoint a successor Trustee to replace the successor
Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately upon
delivery of such notice and provided that all sums owing to the retiring Trustee
provided for in Section 7.7 have been paid, the retiring Trustee shall transfer
all property held by it as trustee to the successor Trustee, subject to the lien
provided in Section 7.7, 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. A successor Trustee shall
mail notice of its succession to each Holder.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holder or Holders of at least 10% in principal amount of then outstanding Notes
may at the expense of the Company petition any court of competent jurisdiction
for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any bona fide
Holder may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.8, the Company's obligations under Section 7.7 shall continue indefinitely for
the benefit of the retiring Trustee.
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Section 7.9. Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee.
Section 7.10. Eligibility; Disqualification.
The Trustee shall at all times satisfy the requirements of TIA ss.
310(a)(1), (2) and (5). The Trustee and its direct parent or, in the case of a
corporation included in a bank holding company system, the related bank holding
company, shall have a combined capital and surplus of at least $50,000,000 as
set forth in its most recent published annual report of condition. The Trustee
shall comply with TIA ss. 310(b).
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated.
Section 7.12. Other Capacities.
All references in this Indenture to the Trustee shall be deemed to
refer to the Trustee in its capacity as Trustee and in its capacities as any
Agent, to the extent acting in such capacities, and every provision of this
Indenture relating to the conduct or affecting the liability or offering
protection, immunity or indemnity to the Trustee shall be deemed to apply with
the same force and effect to the Trustee acting in its capacity as any Agent.
ARTICLE VIII.
SATISFACTION AND DISCHARGE
Section 8.1. Satisfaction and Discharge of Indenture.
The Company may terminate its obligations under this Indenture
(subject to the provisions of this Article VIII and Section 7.7) when it shall
have delivered to the Trustee for cancellation all Notes theretofore
authenticated (other than any Notes which shall have been canceled, lost or
stolen and which shall have been replaced or paid as provided in Article II
hereof) and the following conditions shall be satisfied:
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(1) The Company has paid all sums payable under this Indenture; and
(2) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent have been complied with as contemplated by this Section 8.1.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 7.7 shall survive.
Section 8.2. Repayment to the Company.
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.
ARTICLE IX.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1. Supplemental Indentures Without Consent of Holders.
Notwithstanding Section 9.2 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:
(1) to cure any ambiguity, defect or inconsistency provided
such provisions shall not adversely affect the interest of the
Holders;
(2) to provide for uncertified Notes in addition to or in
place of certificated Notes;
(3) 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 V hereof;
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(4) 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
(5) 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
7.2 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 9.2. Amendments, Supplemental Indentures and Waivers with Consent of
Holders.
Subject to the last sentence of this paragraph, with the consent of
the Holders of not less than a majority in aggregate principal amount of the
Notes then outstanding (including consents obtained in connection with a tender
offer for the Notes), by written act of said Holders delivered to the Company
and the Trustee, the Company, when authorized by Board Resolutions, and the
Trustee may amend or supplement this Indenture or the Notes or enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or the Notes or of modifying in any manner the rights of the
Holders under this Indenture or the Notes. Subject to the last sentence of this
paragraph, the Holder or Holders of not less than a majority in aggregate
principal amount of the Notes then outstanding (including consents obtained in
connection with a tender offer for the Notes), may, in writing, waive any
existing default or compliance by the Company with any provision of this
Indenture or the Notes. Notwithstanding any of the above, however, no such
amendment, supplemental indenture or waiver shall, without the consent of the
Holder of each Note then outstanding affected thereby:
(1) change the Stated Maturity of any Note or reduce the
principal amount thereof or the rate (or extend the time for
payment) of interest thereon or any premium payable upon the
redemption thereof, or change the place of payment where, or the
coin or currency in which, any Note or any premium or the interest
thereon is payable, or impair the right to institute suit for the
conversion of any Note or the enforcement of any such payment on or
after the due date thereof (including, in the case of redemption, on
or after the Redemption Date), or reduce the Repurchase Price, or
alter the Repurchase Offer (other than set forth herein) or
redemption provisions in a manner adverse to the Holders;
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(2) reduce the percentage in principal amount of the
outstanding Notes, the consent of whose Holders is required for any
such amendment, supplemental indenture or waiver provided for in
this Indenture;
(3) waive a Default or Event of Default in the payment of
principal of or premium, if any, on the Notes (except a recission of
acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the Notes and a waiver of the payment
default that resulted from such acceleration);
(4) make any change in the provisions of this Indenture
relating to waivers of past Defaults or the rights of Holders to
receive payments or principal of or premium, if any, on the Notes;
or
(5) adversely affect the right of such Holder to convert
Notes.
It shall not be necessary for the consent of the Holders under this
Section 9.2 to approve the particular form of any proposed amendment, supplement
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.2
becomes effective, the Company shall mail to the Holders 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 supplemental indenture or
waiver.
After an amendment, supplement or waiver under this Section 9.2 or
Section 9.4 becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under this
Article IX, the Company may, but shall not be obligated to, offer to any Holder
who consents to such amendment, supplement or waiver, or (at the option of the
Company) to all Holders, consideration for consent to such amendment, supplement
or waiver.
Section 9.3. Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the Notes
shall comply with the TIA as then in effect.
Section 9.4. Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder 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 or subsequent Holder may revoke the consent as to
his Note or
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portion of his Note by written notice to the Company, the Trustee or the Person
designated by the Company as the Person to whom consents should be sent if such
revocation is received by the Company or such Person before the date on which
the Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Notes have consented (and not theretofore revoked
such consent) to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be the date so fixed by the
Company notwithstanding the provisions of the TIA. If a record date is fixed,
then notwithstanding the last sentence of the immediately preceding paragraph,
those Persons who were Holders at such record date, and only those Persons (or
their duly designated proxies), shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Noteholder, unless it makes a change described in any of clauses (1)
through (5) of Section 9.2, in which case, the amendment, supplement or waiver
shall bind only each Holder of a Note who has consented to it and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note; provided, that any such waiver shall not impair or
affect the right of any Holder to receive payment of principal and premium of
and interest on and Liquidated Damages with respect to a Note, on or after the
respective dates set for such amounts to become due and payable as then
expressed in such Note, or to bring suit for the enforcement of any such payment
on or after such respective dates.
Section 9.5. Notation on or Exchange of Notes.
If an amendment, supplement or waiver changes the terms of a Note,
the Trustee may require the Holder of the Note to deliver it to the Trustee or
require the Holder to put an appropriate notation on the Note. The Trustee may
place an appropriate notation on the Note about the changed terms and return it
to the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Note shall issue and the Trustee shall authenticate
a new Note that reflects the changed terms. Any failure to make the appropriate
notation or to issue a new Note shall not affect the validity of such amendment,
supplement or waiver.
Section 9.6. Trustee to Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article IX; provided, that the Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
any amendment, supplement or waiver authorized pursuant to this Article IX is
authorized or permitted by this Indenture.
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ARTICLE X.
MEETINGS OF NOTEHOLDERS
Section 10.1. Purposes for Which Meetings May Be Called.
A meeting of Noteholders may be called at any time and from time to
time pursuant to the provisions of this Article X for any of the following
purposes:
(a) to give any notice to the Company or to the Trustee, or to give any
directions to the Trustee, or to waive or to consent to the waiving of any
Default or Event of Default hereunder and its consequences, or to take any other
action authorized to be taken by Noteholders pursuant to any of the provisions
of Article VI;
(b) to remove the Trustee or appoint a successor Trustee pursuant to the
provisions of Article VII;
(c) to consent to an amendment, supplement or waiver pursuant to
provisions of Section 9.2; or
(d) to take any other action (i) authorized to be taken by or on behalf of
the Holder or Holders of any specified aggregate principal amount of the Notes
under any other provision of this Indenture, or authorized or permitted by law
or (ii) which the Trustee deems necessary or appropriate in connection with the
administration of this Indenture.
Section 10.2. Manner of Calling Meetings.
The Trustee may at any time call a meeting of Noteholders to take
any action specified in Section 10.1, to be held at such time and at such place
in the City of New York, New York or elsewhere as the Trustee shall determine.
Notice of every meeting of Noteholders, setting forth the time and place of such
meeting and in general terms the action proposed to be taken at such meeting,
shall be mailed at the Company's expense by the Trustee, first-class postage
prepaid, to the Company and to the Holders at their last addresses as they shall
appear on the registration books of the Registrar, not less than 10 nor more
than 60 days prior to the date fixed for a meeting.
Any meeting of Noteholders shall be valid without notice if the
Holders of all Notes then outstanding are present in Person or by proxy, or if
notice is waived before or after the meeting by the Holders of all Notes
outstanding, and if the Company and the Trustee are either present by duly
authorized representatives or have, before or after the meeting, waived notice.
Section 10.3. Calling of Meetings by the Company or Holders.
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In case at any time the Company or the Holders of not less than 10%
in aggregate principal amount of the Notes then outstanding shall have requested
the Trustee to call a meeting of Noteholders to take any action specified in
Section 10.1, by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have mailed the
notice of such meeting within 20 days after receipt of such written request,
then the Company or the Holders of Notes in the amount above specified may
determine the time and place in the City of New York, New York or elsewhere for
such meeting and may call such meeting for the purpose of taking such action, by
mailing or causing to be mailed notice thereof as provided in Section 10.2, or
by causing notice thereof to be published at least once in each of two
successive calendar weeks (on any Business Day during such week) in a newspaper
or newspapers printed in the English language, customarily published at least
five days a week of a general circulation in the City of New York, State of New
York, the first such publication to be not less than 10 nor more than 60 days
prior to the date fixed for the meeting.
Section 10.4. Who May Attend and Vote at Meetings.
To be entitled to vote at any meeting of Noteholders, a Person shall
(a) be a registered Holder of one or more Notes, or (b) be a Person appointed by
an instrument in writing as proxy for the registered Holder or Holders of Notes.
The only Persons who shall be entitled to be present or to speak at any meeting
of Noteholders shall be the Persons entitled to vote at such meeting and their
counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
Section 10.5. Regulations May Be Made by Trustee; Conduct of the Meeting: Voting
Rights: Adjournment.
Notwithstanding any other provision of this Indenture, the Trustee
may make such reasonable regulations as it may deem advisable for any action by
or any meeting of Noteholders, in regard to proof of the holding of Notes and of
the appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, and submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think appropriate. Such regulations may fix a
record date and time for determining the Holders of record of Notes entitled to
vote at such meeting, in which case those and only those Persons who are Holders
of Notes at the record date and time so fixed, or their proxies, shall be
entitled to vote at such meeting whether or not they shall be such Holders at
the time of the meeting.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Noteholders as provided in Section 10.3, in which case the Company
or the Noteholders calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent secretary of
the meeting shall be elected by vote of the Holders of a majority in principal
amount of the Notes represented at the meeting and entitled to vote.
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At any meeting each Noteholder or proxy shall be entitled to one
vote for each $1,000 principal amount of Notes held or represented by him;
provided, however, that no vote shall be cast or counted at any meeting in
respect of any Notes challenged as not outstanding and ruled by the chairman of
the meeting to be not then outstanding. The chairman of the meeting shall have
no right to vote other than by virtue of Notes held by him or instruments in
writing as aforesaid duly designating him as the proxy to vote on behalf of
other Noteholders. Any meeting of Noteholders duly called pursuant to the
provisions of Section 10.2 or Section 10.3 may be adjourned from time to time by
vote of the Holder or Holders of a majority in aggregate principal amount of the
Notes represented at the meeting and entitled to vote, and the meeting may be
held as so adjourned without further notice.
Section 10.6. Voting at the Meeting and Record to Be Kept.
The vote upon any resolution submitted to any meeting of Noteholders
shall be by written ballots on which shall be subscribed the signatures of the
Holders of Notes or of their representatives by proxy and the principal amount
of the Notes voted by the ballot. The permanent chairman of the meeting shall
appoint two inspectors of votes, who shall count all votes cast at the meeting
for or against any resolution and who shall make and file with the secretary of
the meeting their verified written reports in duplicate of all votes cast at the
meeting. A record in duplicate of the proceedings of each meeting of Noteholders
shall be prepared by the secretary of the meeting and there shall be attached to
such record the original reports of the inspectors of votes on any vote by
ballot taken thereat and affidavits by one or more Persons having knowledge of
the facts, setting forth a copy of the notice of the meeting and showing that
such notice was mailed as provided in Section 10.2 or published as provided in
Section 10.3. The record shall be signed and verified by the affidavits of the
permanent chairman and the secretary of the meeting and one of the duplicates
shall be delivered to the Company and the other to the Trustee to be preserved
by the Trustee, the latter to have attached thereto the ballots voted at the
meeting.
Any record so signed and verified shall be conclusive evidence of
the matters therein stated.
Section 10.7. Exercise of Rights of Trustee or Holders May Not Be Hindered or
Delayed by Call of Meeting.
Nothing contained in this Article X shall be deemed or construed to
authorize or permit, by reason of any call of a meeting of Noteholders or any
rights expressly or impliedly conferred hereunder to make such call, any
hindrance or delay in the exercise of any right or rights conferred upon or
reserved to the Trustee or to the Noteholders under any of the provisions of
this Indenture or of the Notes.
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ARTICLE XI.
RIGHT TO REQUIRE REPURCHASE UPON A CHANGE OF CONTROL
Section 11.1. Repurchase of Notes at Option of the Holder Upon a Change of
Control.
(a) Upon the occurrence of a Change of Control, the Company shall make an
offer (a "Repurchase Offer") to each Holder to repurchase all or any part (equal
to $1000 or an integral multiple thereof) of each Holder's Notes at a purchase
price equal to 101% of the aggregate principal amount thereof and Liquidated
Damages thereon, if any, on the date of purchase (the "Repurchase Price").
Within 10 days following any Change of Control, the Company shall mail a notice
to each Holder stating: (1) that the Repurchase Offer is being made pursuant to
this Section 11.1 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 "Repurchase Date"); (3)
that any Note not tendered will continue to accrue interest; (4) that, unless
the Company defaults in the payment of the Repurchase Price, all Notes accepted
for payment pursuant to the Repurchase Offer shall cease to accrue interest
after the Repurchase Date; (5) that Holders electing to have any Notes purchased
pursuant to a Repurchase 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 Repurchase 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 Repurchase 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 $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 Repurchase Date, the Company shall, to the extent lawful, (1)
accept for payment all Notes or portions thereof properly tendered pursuant to
the Repurchase Offer, (2) deposit with the Paying Agent an amount equal to the
Repurchase Price 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 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 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 $1000 or an integral multiple thereof. The Company shall publicly announce
the results of the Repurchase Offer on or as soon as practicable after the
Repurchase Date.
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Section 11.2. Change of Control Offer Made by a Third Party.
Notwithstanding anything to the contrary in Section 11.1, the
Company shall not be required to make a Repurchase Offer upon a Change of
Control if a third party makes the Repurchase Offer in the manner, at the times
and otherwise in compliance with the requirements set forth in Section 11.1
hereof and purchases all Notes validly tendered and not withdrawn under such
Repurchase Offer.
ARTICLE XII.
SUBORDINATION
Section 12.1. Notes Subordinated to Senior Indebtedness.
The Company and each Holder, by its acceptance of Notes, agree that
(a) the payment of the principal of and interest on the Notes and (b) any other
payment in respect of the Notes, including on account of the acquisition or
redemption of the Notes by the Company and any premium and Liquidated Damages
(including, without limitation, pursuant to Article XI (but specifically
excluding payments to the Trustee for its own benefit), and including the
payment of cash, property or securities (other than Junior Securities) upon
conversion of a Note, is subordinated, to the extent and in the manner provided
in this Article XII, to the prior payment in full of all Senior Indebtedness of
the Company, whether outstanding at the date of this Indenture or thereafter
created, incurred, assumed or guaranteed, and that these subordination
provisions are for the benefit of the holders of Senior Indebtedness.
This Article XII shall constitute a continuing offer to all Persons
who, in reliance upon such provisions, become holders of, or continue to hold,
Senior Indebtedness, and such provisions are made for the benefit of the holders
of Senior Indebtedness, and such holders are made obligees hereunder and any one
or more of them may enforce such provisions.
Section 12.2. No Payment on Notes in Certain Circumstances.
(a) No payment may be made by the Company, directly or through any
Subsidiary, on account of the principal of, premium, if any, interest on, or
Liquidated Damages with respect to, the Notes, or to acquire any of the Notes
(including repurchases of Notes at the option of the Holder) for cash or
property (other than Junior Securities), or on account of the redemption
provisions of the Notes, (i) upon the maturity of any Senior Indebtedness by
lapse of time, acceleration (unless waived) or otherwise, unless and until all
principal of, premium, if any, and interest on and other amounts payable in
respect of Senior Indebtedness are first paid in full (or such payment is duly
provided for), or (ii) in the event of default in the payment of any principal
of, premium, if any, or interest on any Senior Indebtedness when it becomes due
and payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise (collectively, a "Payment Default"), unless and until
such Payment Default has been cured or waived or otherwise has ceased to exist.
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(b) Upon (i) the happening of an Event of Default (other than a
Payment Default) that permits, or would permit, with (w) the passage of time,
(x) the giving of notice, (y) the making of any payment of the Notes then
required to be made, or (z) any combination thereof (collectively, a
"Non-Payment Default"), the holders of Senior Indebtedness having a principal
amount then outstanding in excess of $10,000,000 or their respective
representatives immediately to accelerate the maturity of such Indebtedness and
(ii) written notice of such Non-Payment Default being given to the Company and
the Trustee by the holders of Senior Indebtedness or their representative (a
"Payment Notice"), then, unless and until such Non-Payment Default has been
cured or waived or otherwise has ceased to exist, no payment (by set-off or
otherwise) may be made by or on behalf of the Company, directly or through any
Subsidiary or Minority Owned Affiliate, on account of the principal of, premium,
if any, interest on, or Liquidated Damages with respect to, the Notes, or to
acquire or repurchase any of the Notes for cash or property, or on account of
the redemption provisions of the Notes, in any such case other than payments
made with Junior Securities. Notwithstanding the foregoing, unless (i) the
Senior Indebtedness in respect of which such Non-Payment Default exists has been
declared due and payable in its entirety within 179 days after the Payment
Notice is delivered as set forth above (the "Payment Blockage Period"), and (ii)
such declaration has not been rescinded or waived, at the end of the Payment
Blockage Period, the Company shall be required to pay to the Holders of the
Notes all regularly scheduled payments on the Notes that were not paid during
the Payment Blockage Period due to the foregoing prohibitions (and upon the
making of such payments any acceleration of the Notes made during the Payment
Blockage Period shall be of no further force or effect) and to resume all other
payments as and when due on the Notes. Not more than one Payment Notice may be
given in any consecutive 360-day period, unless such Event of Default or such
other Events of Default have been cured or waived for a period of not less than
90 consecutive days. In no event, however, may the total number of days during
which any Payment Blockage Period is or Payment Blockage Periods are in effect
exceed 179 days in the aggregate during any consecutive 360-day period.
(c) In furtherance of the provisions of Section 12.1, in the event
that, notwithstanding the foregoing provisions of this Section 12.2, any payment
or distribution of assets of the Company or any Subsidiary or Minority Owned
Affiliate (other than Junior Securities) shall be received by the Trustee for
the benefit of the Holders or the Holders or any Paying Agent for the benefit of
the Holders at a time when such payment or distribution is prohibited by the
provisions of this Section 12.2, then such payment or distribution (subject to
the provisions of Article VII and Sections 12.6, 12.7 and 12.12) shall be
received and held in trust by the Trustee or such Holder or Paying Agent for the
benefit of the holders of Senior Indebtedness, and shall be paid or delivered by
the Trustee or such Holders or such Paying Agent, as the case may be, to the
representative or representatives of the holders of Senior Indebtedness
remaining unpaid, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any of such Senior Indebtedness may have been
issued, for application to the payment of all Senior Indebtedness in full after
giving effect to any concurrent payment and distribution to the holders of such
Senior Indebtedness.
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Section 12.3. Notes Subordinated to Prior Payment of All Senior Indebtedness on
Dissolution Liquidation or Reorganization.
Upon any distribution of assets of the Company upon any dissolution,
winding up, total or partial liquidation or reorganization of the Company,
whether voluntary or involuntary, in bankruptcy, insolvency, receivership or a
similar proceeding or upon assignment for the benefit of creditors or any
marshaling of assets or liabilities:
(a) the holders of all Senior Indebtedness shall first be entitled to
receive payment in full (or have such payment duly provided for) before the
Holders of the Notes are entitled to receive any payment on account of the
principal of, premium, if any, interest on, and Liquidated Damages with respect
to, the Notes (other than Junior Securities);
(b) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities (other than Junior
Securities) to which the Holders of the Notes or the Trustee on behalf of the
Holders would be entitled (by setoff or otherwise), except for the provisions of
this Article XII, shall be paid by the liquidating trustee or agent or other
Person making such a payment or distribution directly to the holders of Senior
Indebtedness or their representative to the extent necessary to make payment in
full of all such Senior Indebtedness remaining unpaid, after giving effect to
any concurrent payment or distribution, or provision therefor, to the holders of
such Senior Indebtedness (but this Section 12.3(b) shall not apply to payments
or distributions to the Trustee for its own benefit); and
(c) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company or any Subsidiary or Minority Owned
Affiliate (other than Junior Securities) shall be received by the Holders of the
Notes or the Trustee on behalf of the Holders or any Paying Agent at a time when
such payment or distribution is prohibited by the foregoing provisions, such
payment or distribution shall be held in trust for the benefit of the holders of
Senior Indebtedness, and shall be paid or delivered by such Holders or the
Trustee or such Paying Agent, as the case may be, to the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee, agent or other Person making
payment or distribution of assets of the Company for application to the payment
of all Senior Indebtedness remaining unpaid, to the extent necessary to pay or
to provide for the payment of all such Senior Indebtedness in full after giving
effect to any concurrent payment or distribution, or provision therefor, to the
holders of such Senior Indebtedness.
Section 12.4. Noteholders to Be Subrogated to Rights of Holders of Senior
Indebtedness.
Subject to the payment in full of all Senior Indebtedness as
provided herein, the Holders of Notes shall be subrogated to the rights of the
holders of such Senior Indebtedness to receive payments or distributions of
assets of the Company applicable to the Senior Indebtedness until all amounts
owing on the Notes shall be paid in full, and for the purpose of such
subrogation no such payments or distributions to the holders of such Senior
Indebtedness by the Company, or by or on behalf of the Holders by virtue of this
Article XII, which otherwise would have been made to the Holders shall, as
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between the Company and the Holders, be deemed to be payment by the Company or
on account of such Senior Indebtedness, it being understood that the provisions
of this Article XII are and are intended solely for the purpose of defining the
relative rights of the Holders, on the one hand, and the holders of such Senior
Indebtedness, on the other hand.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article XII shall have been
applied, pursuant to the provisions of this Article XII, to the payment of
amounts payable under Senior Indebtedness, then the Holders shall be entitled to
receive from the holders of such Senior Indebtedness any payments or
distributions received by such holders of Senior Indebtedness in excess of the
amount sufficient to pay all amounts payable under or in respect of such Senior
Indebtedness in full.
Section 12.5. Obligations of the Company Unconditional.
Nothing contained in this Article XII or elsewhere in this Indenture
or in the Notes is intended to or shall impair as between the Company and the
Holders the obligation of each such Person, which is absolute and unconditional,
to pay to the Holders the principal of, premium, if any, interest on, and
Liquidated Damages with respect to, the Notes as and when the same shall become
due and payable in accordance with their terms, or is intended to or shall
affect the relative rights of the Holders and creditors of the Company other
than the holders of the Senior Indebtedness, nor shall anything herein or
therein prevent the Trustee or any Holder from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, subject to the
rights, if any, under this Article XII, of the holders of Senior Indebtedness in
respect of cash, property or securities of the Company received upon the
exercise of any such remedy. Notwithstanding anything to the contrary in this
Article XII or elsewhere in this Indenture or in the Notes, upon any
distribution of assets of the Company referred to in this Article XII, the
Trustee, subject to the provisions of Sections 7.1 and 7.2, and the Holders
shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
trustee or agent or other Person making any distribution to the Trustee or to
the Holders, for the purpose of ascertaining the Persons entitled to participate
in such distribution, the holders of the Senior Indebtedness and other
Indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article XII so long as such court has been apprised of the provisions
of, or the order, decree or certificate makes reference to, the provisions of
this Article XII. Nothing in this Section 12.5 shall apply to the claims of, or
payments to, the Trustee under or pursuant to Section 7.7 or otherwise for its
own benefit.
Section 12.6. Trustee and Other Agents Entitled to Assume Payments Not
Prohibited in Absence of Notice.
The Trustee and all other Agents shall not at any time be charged
with knowledge of the existence of any facts which would prohibit the making of
any payment to or by the Trustee unless and until a Trust Officer of the Trustee
or any Paying Agent shall have actually received, no later than three Business
Days prior to such payment, written notice thereof in compliance with Section
14.2 from the
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Company or from one or more holders of Senior Indebtedness or from any
representative therefor and, prior to the receipt of any such written notice,
the Trustee, subject to the provisions of Sections 7.1 and 7.2, shall be
entitled in all respects conclusively to assume that no such fact exists.
Section 12.7. Application by Trustee of Assets Deposited with It.
Amounts deposited in trust with the Trustee pursuant to and in
accordance with this Indenture shall be, subject to Section 7.7, for the sole
benefit of Noteholders and, to the extent allocated for the payment of Notes,
shall not be subject to the subordination provisions of this Article XII.
Otherwise, any deposit of assets with the Trustee or any other Agent (whether or
not in trust) for the payment of principal of or interest on any Notes shall be
subject to the provisions of Sections 12.1, 12.2, 12.3 and 12.4; provided that
by, if prior to three Business Days preceding the date on which by the terms of
this Indenture any such assets may become distributable for any purpose
(including, without limitation, the payment of either principal of or interest
on any Note) the Trustee or such Paying Agent shall not have received with
respect to such assets the written notice provided for in Section 12.6, then the
Trustee or such Paying Agent shall have full power and authority to receive such
assets and to apply the same to the purpose for which they were received,
without liability, and shall not be affected by any notice to the contrary which
may be received by it on or after such date.
Section 12.8. Subordination Rights Not Impaired by Acts or Omissions of the
Company or Holders of Senior Indebtedness.
No right of any present or future holders of any Senior Indebtedness
to enforce subordination provisions contained in this Article XII shall at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of the Company or by any act or failure to act, in good faith, by any such
holder, or by any noncompliance by the Company with the terms of this Indenture,
regardless of any knowledge thereof which any such holder may have or be
otherwise charged with. The holders of Senior Indebtedness may extend, renew,
modify or amend the terms of the Senior Indebtedness or any security therefor
and release, sell or exchange such security and otherwise deal freely with the
Company, all without affecting the liabilities and obligations of the parties to
this Indenture or the Holders.
Section 12.9. Noteholders Authorize Trustee to Effectuate Subordination of
Notes.
Each Holder of the Notes by his acceptance thereof authorizes the
Trustee on his behalf to take such action as may be necessary or appropriate to
effectuate the subordination provisions contained in this Article XII and to
protect the rights of the Holders pursuant to this Indenture, and appoints the
Trustee his attorney-in-fact for such purpose, including, in the event of any
dissolution, winding up, liquidation or reorganization of the Company (whether
in bankruptcy, insolvency or receivership proceedings or upon an assignment for
the benefit of creditors of the Company), the immediate filing of a claim for
the unpaid balance of his Notes in the form required in said proceedings and
cause said claim to be approved. If the Trustee does not file a proper claim or
proof of debt in the form required in such proceeding prior to 30 days before
the expiration of the time to file such claim or
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claims, then the holders of the Senior Indebtedness or their representative are
or is hereby authorized to have the right to file and are or is hereby
authorized to file an appropriate claim for and on behalf of the Holders of said
Notes. Nothing herein contained shall be deemed to authorize the Trustee or the
holders of Senior Indebtedness or their representative to authorize or consent
to or accept or adopt on behalf of any Noteholder any plan of reorganization,
arrangement, adjustment or composition affecting the Notes or the rights of any
Holder thereof, or to authorize the Trustee or the holders of Senior
Indebtedness or their representative to vote in respect of the claim of any
Noteholder in any such proceeding.
Section 12.10. Right of Trustee to Hold Senior Indebtedness.
The Trustee shall be entitled to all of the rights set forth in this
Article XII in respect of any Senior Indebtedness at any time held by it to the
same extent as any other holder of Senior Indebtedness, and nothing in this
Indenture shall be construed to deprive the Trustee of any of its rights as such
holder.
Section 12.11. Article XII Not to Prevent Events of Default.
The failure to make a payment on account of principal of, premium,
if any, interest on, or Liquidated Damages with respect to, the Notes by reason
of any provision of this Article XII shall not be construed as preventing the
occurrence of a Default or an Event of Default under Section 6.1 or in any way
prevent the Holders from exercising any right hereunder other than the right to
receive payment on the Notes.
Section 12.12. No Duty of Trustee and Other Agents to Holders of Senior
Indebtedness.
The Trustee and the other Agents shall not be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness, and shall not be liable to
any such holders (other than for its willful misconduct or negligence) if it
shall in good faith mistakenly pay over or distribute to the Holders of Notes or
the Company or any other Person, cash, property or securities to which any
holders of Senior Indebtedness shall be entitled by virtue of this Article XII
or otherwise. Nothing in this Section 12.12 shall affect the obligation of any
other such Person receiving such payment or distribution from the Trustee or any
other Agent to hold such payment for the benefit of, and to pay such payment
over to, the holders of Senior Indebtedness or their representative.
ARTICLE XIII.
CONVERSION OF NOTES
Section 13.1. Conversion Privilege.
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Subject to and upon compliance with the provisions of this Article
XIII, at the option of the Holder thereof, any Note may at any time, be
converted, in whole, or in part in integral multiples of $1,000 principal
amount, into fully paid and non-assessable shares of Common Stock issuable upon
conversion of the Notes, at the conversion price in effect at the Date of
Conversion, until and including, but not after the close of business on the
Stated Maturity, unless such Note or some portion thereof shall have been called
for redemption or delivered for repurchase prior to such date and no default is
made in making due provision for the payment of the Redemption Price or the
Repurchase Price, as the case may be, in accordance with the terms of this
Indenture, in which case, with respect to such Note or portion thereof as has
been so called for redemption or delivered for repurchase, such Note or portion
thereof may be so converted until and including, but not after, the close of
business on the fifth or second Business Day, respectively, immediately prior to
the Redemption Date or Repurchase Date, for such Note, unless the Company
subsequently fails to pay the applicable Redemption Price or Repurchase Price,
as the case may be.
Section 13.2. Exercise of Conversion Privilege.
In order to exercise the conversion privilege, the Holder of any
Note to be converted shall surrender such Note to the Company at any time during
usual business hours at its office or agency maintained for the purpose as
provided in this Indenture, accompanied by a fully executed written notice, in
substantially the form set forth on the reverse of the Note, that the Holder
elects to convert such Note or a stated portion thereof constituting an integral
multiple of $1,000 principal amount, and, if such Note is surrendered for
conversion during the period between the close of business on any Record Date
and the opening of business on the next following Interest Payment Date and has
not been called for redemption on a Redemption Date which occurs within such
period, accompanied (except in the case of the Interest Payment Date occurring
on April 4, 2001) also by payment of an amount equal to the interest payable on
such Interest Payment Date on the principal amount of the Note being surrendered
for conversion, notwithstanding such conversion. Such notice of conversion shall
also state the name or names (with address) in which the certificate or
certificates for shares of Common Stock shall be issued. Notes surrendered for
conversion shall (if reasonably required by the Company or the Trustee) be duly
endorsed by, or be accompanied by a written instrument or instruments of
transfer in form satisfactory to the Company duly executed by, the Holder or his
attorney duly authorized in writing. As promptly as practicable after the
receipt of such notice and the surrender of such Note as aforesaid, the Company
shall, subject to the provisions of Section 13.8 hereof, issue and deliver at
such office or agency to such Holder, or on his written order, a certificate or
certificates for the number of full shares of Common Stock issuable on such
conversion of Notes in accordance with the provisions of this Article XIII and
Cash, as provided in Section 13.3 hereof, in respect of any fraction of a share
of Common Stock otherwise issuable upon such conversion. Such conversion shall
be deemed to have been effected immediately prior to the close of business on
the date (herein called the "Date of Conversion") on which such Note shall have
been surrendered as aforesaid, and the person or persons in whose name or names
any certificate or certificates for shares of Common Stock shall be issuable
upon such conversion shall be deemed to have become on the Date of Conversion
the holder or holders of record of the shares represented thereby; provided,
however, that any such surrender on any date when the stock transfer
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books of the Company shall be closed shall cause the person or persons in whose
name or names the certificate or certificates for such shares are to be issued
to be deemed to have become the record holder or holders thereof for all
purposes at the opening of business on the next succeeding day on which such
stock transfer books are open but such conversion shall nevertheless be at the
conversion price in effect at the close of business on the date when such Note
shall have been so surrendered with the conversion notice. In the case of
conversion of a portion, but less than all, of a Note, the Company shall as
promptly as practicable execute, and the Trustee shall thereafter authenticate
and deliver to the Holder thereof, at the expense of the Company, a Note or
Notes in the aggregate principal amount of the unconverted portion of the Note
surrendered. Except as otherwise expressly provided in this Indenture, no
payment or adjustment shall be made for interest accrued on any Note (or portion
thereof) converted or for dividends or distributions on any Common Stock issued
upon conversion of any Note.
Section 13.3. Fractional Interests.
No fractions of shares or scrip representing fractions of shares
shall be issued upon conversion of Notes. If more than one Note shall be
surrendered for conversion at one time by the same holder, the number of full
shares which shall be issuable upon conversion thereof shall be computed on the
basis of the aggregate principal amount of the Notes so surrendered. If any
fraction of a share of Common Stock would, except for the foregoing provisions
of this Section 13.3, be issuable on the conversion of any Note or Notes, the
Company shall make payment in lieu thereof in an amount of Cash equal to the
value of such fraction computed on the basis of the last sale price of the
Common Stock as reported on the Nasdaq Stock Market's National Market (or if not
listed for trading thereon, then on the principal national securities exchange
or on the principal automated quotation system on which the Common Stock is
listed or admitted to trading) at the close of business on the Date of
Conversion or if no such sale takes place on such day, the last sale price for
such day shall be the average of the closing bid and asked prices regular way on
the Nasdaq Stock Market's National Market (or if not listed for trading thereon,
on the principal national securities exchange or on the principal automated
quotation system on which the Common Stock is listed or admitted to trading) for
such day (any such last sale price being hereinafter referred to as the "Last
Sale Price"). If on such Trading Day the Common Stock is not quoted by any such
organization, the fair value of such Common Stock on such day, as reasonably
determined in good faith by the Board of Directors of the Company, shall be
used.
Section 13.4. Conversion Price.
The conversion price per share of Common Stock issuable upon
conversion of the Notes (as such price may be adjusted, herein called the
"Conversion Price") shall initially be $59.92 (which reflects a conversion rate
of 16.6884 shares of Common Stock per $1,000 in principal amount of Notes).
Section 13.5. Adjustment of Conversion Price.
The Conversion Price shall be subject to adjustment from time to
time as follows:
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(a) In case the Company shall make or pay a dividend or make a
distribution in shares of Common Stock on any class of Capital Stock of the
Company, the Conversion Price in effect immediately following the record date
fixed for the determination of stockholders entitled to receive such dividend or
other distribution shall be reduced by multiplying such Conversion Price by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on such date and the denominator shall be
the sum of such number of shares and the total number of shares constituting
such dividend or other distribution. An adjustment made pursuant to this
subsection (a) shall become effective immediately, except as provided in
subsection (i) and (j) below, after such record date.
(b) In case the Company shall (1) subdivide its outstanding shares
of Common Stock into a greater number of shares or (2) combine or reclassify its
outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately following the effectiveness of such
action shall be adjusted by multiplying such Conversion Price by a fraction of
which the numerator shall be the number of shares of Common Stock outstanding
immediately prior to such subdivision or combination and the denominator shall
be the number of shares outstanding immediately after giving effect to such
subdivision or combination. An adjustment made pursuant to this subsection (b)
shall become effective immediately, except as provided in subsection (i) and (j)
below, after the effective date of a subdivision or combination.
(c) In case the Company shall issue rights, options or warrants to
all or substantially all holders of Common Stock entitling them to subscribe for
or purchase shares of Common Stock at a price per share less than the then
current market price per share of the Common Stock (as determined pursuant to
subsection (g) below) on the record date fixed for determination of the
stockholders entitled to receive such rights, option or warrants, the Conversion
Price in effect immediately following such record date shall be adjusted to a
price, computed to the nearest cent, so that the same shall equal the price
determined by multiplying:
(i) such Conversion Price by a fraction, of which
(ii) the numerator shall be (A) the number of shares of Common Stock
outstanding on such record date plus (B) the number of shares which the
aggregate offering price of the total number of shares so offered for
subscription or purchase would purchase at such current market price
(determined by multiplying such total number of shares by the exercise
price of such rights, options or warrants and dividing the product so
obtained by such current market price), and of which
(iii) the denominator shall be (A) the number of shares of Common
Stock outstanding on such record date plus (B) the number of additional
shares of Common Stock which are so offered for subscription or purchase.
Such adjustment shall become effective immediately, except as
provided in subsection (i) and (j) below, after the record date for the
determination of holders entitled to receive such rights,
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options or warrants; provided, however, that if any such rights, options or
warrants issued by the Company as described in this subsection (c) are only
exercisable upon the occurrence of certain triggering events, then the
Conversion Price will not be adjusted as provided in this subsection (c) until
such triggering events occur. Upon the expiration or termination of any rights,
options or warrants without the exercise of such rights, options or warrants,
the Conversion Price then in effect shall be adjusted immediately to the
Conversion Price which would have been in effect at the time of such expiration
or termination had such rights, options or warrants, to the extent outstanding
immediately prior to such expiration or termination, never been issued.
(d) In case the Company or any Subsidiary or Minority Owned
Affiliate of the Company shall distribute to all or substantially all holders of
Common Stock, any of its assets, evidences of indebtedness, cash or securities
(other than (x) dividends or distributions exclusively in cash, (y) any dividend
or distribution for which an adjustment is required to be made in accordance
with subsection (a) or (c) above and in mergers and consolidations to which
Section 13.6 applies, or (z) any distribution of rights or warrants subject to
subsection (1) below) then in each such case the Conversion Price in effect
immediately following the record date fixed for the determination of the
stockholders entitled to such distribution shall be adjusted so that the same
shall equal the price determined by multiplying such Conversion Price by a
fraction of which the numerator shall be the then current market price per share
of the Common Stock (determined as provided in subsection (g) below) on such
record date less the then fair market value (as reasonably determined in good
faith by the Board of Directors of the Company) of the portion of the assets so
distributed applicable to one share of Common Stock, and of which the
denominator shall be such current market price per share of the Common Stock.
Such adjustment shall become effective immediately, except as provided in
subsection (i) and (j) below, after the record date for the determination of
stockholders entitled to receive such distribution.
(e) In case the Company or any Subsidiary of the Company shall make
any distribution consisting exclusively of cash (excluding any cash portion of
distributions for which an adjustment is required to be made in accordance with
subsection (d) above, or cash distributed upon a merger or consolidation to
which Section 13.6 applies) to all or substantially all holders of Common Stock
in an aggregate amount that, combined together with (i) all other such all-cash
distributions made within the then preceding 12 months in respect of which no
adjustment pursuant to this subsection (e) has been made and (ii) any cash and
the fair market value of other consideration paid or payable in respect of any
tender or exchange offer by the Company or any of its Subsidiaries for Common
Stock concluded within the preceding 12 months in respect of which no adjustment
has been made, exceeds 15% of the Company's market capitalization (defined as
being the product of the then current market price of the Common Stock
(determined as provided in subsection (g) below) times the number of shares of
Common Stock then outstanding) on the record date fixed for the determination of
the stockholders entitled to such distribution, in each such case the Conversion
Price immediately following such record date shall be adjusted so that the same
shall equal the price determined by multiplying such Conversion Price by a
fraction of which the numerator shall be the then current market price per share
of the Common Stock on such record date less the amount of the cash and/or fair
market value (as reasonably determined in good faith by the Board of Directors
of the Company) of other consideration so distributed
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applicable to one share of Common Stock, and of which the denominator shall be
such current market price per share of the Common Stock. Such adjustment shall
become effective immediately, except as provided in subsection (i) and (j)
below, after the record date for the determination of stockholders entitled to
receive such distribution.
(f) In case the Company or any Subsidiary of the Company shall
complete a tender or exchange offer for all or any portion of the Common Stock
(any such tender or exchange offer being referred to as an "Offer") to the
extent that the aggregate consideration of such Offer, having a fair market
value as of the expiration of such Offer (the "Expiration Time"), together with
(i) any cash and the fair market value of any other consideration payable in
respect of any other tender or exchange offer for Common Stock, as of the
expiration of such other tender or exchange offer, expiring within the 12 months
preceding the expiration of such Offer and in respect of which no Conversion
Price adjustment pursuant to this subsection (f) has been made and (ii) the
aggregate amount of any all-cash distributions referred to in subsection (e) of
this Section 13.5 to all holders of Common Stock within the 12 months preceding
the expiration of such Offer for which no Conversion Price adjustment pursuant
to such subsection (e) has been made, exceeds 15% of the product of the then
current market price per share (determined as provided in subsection (g) below)
of the Common Stock on the Expiration Time times the number of shares of Common
Stock outstanding (including any tendered shares) on the Expiration Time, the
Conversion Price in effect immediately following such Expiration Time shall be
reduced by multiplying such Conversion Price by a fraction of which the
numerator shall be (i) the product of the then current market price per share
(determined as provided in subsection (g) below) of the Common Stock on the
Expiration Time times the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time minus (ii) the fair
market value of the aggregate consideration so in excess of such 15% and payable
to stockholders based on the acceptance (up to any maximum specified in the
terms of the Offer) of all shares validly tendered and not withdrawn as of the
Expiration Time (the shares deemed so accepted being referred to as the
"Purchased Shares") and the denominator shall be the product of (i) such current
market price per share on the Expiration Time times (ii) such number of
outstanding shares on the Expiration Time less the number of Purchased Shares,
such reduction to become effective immediately prior to the opening of business
on the day following the Expiration Time.
For purposes of this subsection (f), the fair market value of any
consideration with respect to an Offer shall be reasonably determined in good
faith by the Board of Directors of the Company and described in a Board
Resolution.
(g) For the purpose of any computation under subsections (c), (d),
(e) and (f) above, the current market price per share of Common Stock on any
date shall be deemed to be the average of the Last Sale Prices of a share of
Common Stock for the five consecutive Trading Days selected by the Company
commencing not more than 20 Trading Days before, and ending not later than, the
earlier of the date in question and the date before the "'ex' date," with
respect to the issuance, distribution or Offer requiring such computation. If on
any such Trading Day the Common Stock is not quoted by any organization referred
to in the definition of Last Sale Price in Section 13.3 hereof, the fair value
of the Common Stock on such day, as reasonably determined in good faith by the
Board of Directors of the
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Company, shall be used. For purposes of this paragraph, the term "'ex' date,"
when used with respect to any issuance, distribution or payments with respect to
an Offer, means the first date on which the Common Stock trades regular way on
the Nasdaq Stock Market's National Market (or if not listed or admitted to
trading thereon, then on the principal national securities exchange or automated
quotation system if the Common Stock is listed or admitted to trading thereon)
without the right to receive such issuance, distribution or Offer.
(h) In addition to the foregoing adjustments in subsections (a),
(b), (c), (d), (e) and (f) above, the Company, from time to time and to the
extent permitted by law, may reduce the Conversion Price by any amount for at
least 20 Business Days, if the Board of Directors has made a determination,
which determination shall be conclusive, that such reduction would be in the
best interests of the Company. The Company shall cause notice of such reduction
to be mailed to each Holder of Notes, in the manner specified in Section 13.7,
at least 15 days prior to the date on which such reduction commences. The
Company may, at its option, also make such reductions in the Conversion Price in
addition to those set forth above, as the Board of Directors deems advisable to
avoid or diminish any income tax to holders of shares of Common Stock resulting
from any dividend or distribution of stock (or rights to acquire stock) or from
any event treated as such for United States federal income tax purposes.
(i) In any case in which this Section 13.5 shall require that an
adjustment be made immediately following a record date, the Company may elect to
defer the effectiveness of such adjustment (but in no event until a date later
than the effective time of the event giving rise to such adjustment), in which
case the Company shall, with respect to any Note converted after such record
date and on and before such adjustment shall have become effective (i) defer
paying any Cash payment pursuant to Section 13.3 hereof or issuing to the Holder
of such Note the number of shares of Common Stock and other capital stock of the
Company (or other assets or securities) issuable upon such conversion in excess
of the number of shares of Common Stock and other Capital Stock of the Company
issuable thereupon only on the basis of the Conversion Price prior to
adjustment, and (ii) not later than five Business Days after such adjustment
shall have become effective, pay to such Holder the appropriate Cash payment
pursuant to Section 13.3 hereof and issue to such Holder the additional shares
of Common Stock and other Capital Stock of the Company issuable on such
conversion.
(j) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1.0% of the
Conversion Price; provided, that any adjustments which by reason of this
subsection (i) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Article
XIII shall be made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be.
(k) Whenever the Conversion Price is adjusted as herein provided,
the Company shall promptly (i) file with the Trustee and each conversion agent
an Officers' Certificate setting forth the Conversion Price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment, which certificate shall be conclusive evidence of the correctness of
such adjustment, and (ii)
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mail or cause to be mailed a notice of such adjustment to each holder of Notes
at his address as the same appears on the registry books of the Company.
(l) In the event that the Company distributes rights or warrants
(other than those referred to in subsection (c) above) pro rata to holders of
Common Stock, so long as any such rights or warrants have not expired or been
redeemed by the Company, the Company shall make proper provision so that the
Holder of any Note surrendered for conversion will be entitled to receive upon
such conversion, in addition to the shares of Common Stock issuable upon such
conversion (the "Conversion Shares"), a number of rights or warrants to be
determined as follows: (i) if such conversion occurs on or prior to the date for
the distribution to the holders of rights or warrants of separate certificates
evidencing such rights or warrants (the "Distribution Date"), the same number of
rights or warrants to which a holder of a number of shares of Common Stock equal
to the number of Conversion Shares is entitled at the time of such conversion in
accordance with the terms and provisions of and applicable to the rights or
warrants, and (ii) if such conversion occurs after such Distribution Date, the
same number of rights or warrants to which a holder of the number of shares of
Common Stock into which the principal amount of such Note so converted was
convertible immediately prior to such Distribution Date would have been entitled
on such Distribution Date in accordance with the terms and provisions of and
applicable to the rights or warrants.
Section 13.6. Continuation of Conversion Privilege in Case of Reclassification,
Change, Merger, Consolidation or Sale of Assets.
If any of the following shall occur, namely: (a) any
reclassification or change of outstanding shares of Common Stock issuable upon
conversion of the Notes (other than a change in par value, or from par value to
no par value, or from no par value, to par value, or as a result of a
subdivision or combination), (b) any consolidation or merger of the Company with
or into any other Person, or the merger of any other Person with or into the
Company (other than a merger which does not result in any reclassification,
change, conversion, exchange or cancellation of outstanding shares of Common
Stock) or (c) any sale, transfer or conveyance of all or substantially all of
the assets of the Company (computed on a consolidated basis), then the Company,
or such successor or purchasing entity, as the case may be, shall, as a
condition precedent to such reclassification, change, consolidation, merger,
sale or conveyance, execute and deliver to the Trustee a supplemental indenture
providing that the Holder of each Note then outstanding shall have the right to
convert such Note only into the kind and amount of shares of stock and other
securities and property (including cash) receivable upon such reclassification,
change, consolidation, merger, sale, transfer or conveyance by a holder of the
number of shares of Common Stock issuable upon conversion of such Note
immediately prior to such reclassification, change, consolidation, merger, sale,
transfer or conveyance assuming such holder of Common Stock of the Company
failed to exercise his rights of an election, if any, as to the kind or amount
of securities, cash and other property receivable upon such reclassification,
change, consolidation, merger, sale, transfer or conveyance (provided that if
the kind or amount of securities, cash, and other property receivable upon such
reclassification, change, consolidation, merger, sale, transfer or conveyance is
not the same for each share of Common Stock of the Company held immediately
prior to such reclassification, change, consolidation, merger, sale, transfer or
conveyance in respect of which such
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rights of election shall not have been exercised ("non-electing share"), then
for the purpose of this Section 13.6 the kind and amount of securities, cash and
other property receivable upon such reclassification, change, consolidation,
merger, sale, transfer or conveyance by each non-electing share shall be deemed
to be the kind and amount so receivable per share by a plurality of the
non-electing shares). Such supplemental indenture shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article XIII. If, in the case of any such consolidation,
merger, sale or conveyance, the stock or other securities and property
(including cash) receivable thereupon by a holder of shares of Common Stock
includes shares of stock or other securities and property (including cash) of a
corporation other than the successor or purchasing corporation, as the case may
be, in such consolidation, merger, sale or conveyance, then such supplemental
indenture shall also be executed by such other corporation and shall contain
such additional provisions to protect the interests of the Holders of the Notes
as the Board of Directors of the Company shall reasonably consider necessary by
reason of the foregoing. The provisions of this Section 13.6 shall similarly
apply to successive consolidations, mergers, sales or conveyances.
Notice of the execution of each such supplemental indenture shall be
mailed to each Holder of Notes at his address as the same appears on the
registry books of the Company.
Neither the Trustee nor any conversion agent shall be under any
responsibility to determine the correctness of any provisions contained in any
such supplemental indenture relating either to the kind or amount of shares of
stock or securities or property (including cash) receivable by Holders of Notes
upon the conversion of their Notes after any such reclassification, change,
consolidation, merger, sale or conveyance or to any adjustment to be made with
respect thereto, but, subject to the provisions of Article VII hereof, may
accept as conclusive evidence of the correctness of any such provisions, and
shall be protected in relying upon, the Officers' Certificate (which the Company
shall be obligated to file with the Trustee prior to the execution of any such
supplemental indenture) with respect thereto.
Section 13.7. Notice of Certain Events.
In case:
(a) the Company shall declare a dividend (or any other distribution)
payable to the holders of Common Stock (other than cash dividends);
(b) the Company shall authorize the granting to the holders of Common
Stock of rights, warrants or options to subscribe for or purchase any shares of
stock of any class or of any other rights;
(c) the Company shall authorize any reclassification or change of the
Common Stock (including a subdivision or combination of its outstanding shares
of Common Stock), or any consolidation or merger to which the Company is a party
and for which approval of any stockholders of the Company is required, or the
sale or conveyance of all or substantially all the property or business of the
Company;
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(d) there shall be proposed any voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
(e) the Company or any of its Subsidiaries shall complete an Offer;
then, the Company shall cause to be filed at the office or agency maintained for
the purpose of conversion of the Notes as provided in Section 13.2 hereof, and
shall cause to be mailed to each Holder of Notes, at his address as it shall
appear on the registry books of the Company, at least 20 days before the date
hereinafter specified (or the earlier of the dates hereinafter specified, in the
event that more than one date is specified), a notice stating the date on which
(1) a record is expected to be taken for the purpose of such dividend,
distribution, rights, warrants or options or Offer, or if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution, rights, warrants or options or to participate in
such Offer are to be determined, or (2) such reclassification, change,
consolidation, merger, sale, conveyance, dissolution, liquidation or winding-up
is expected to become effective and the date, if any is to be fixed, as of which
it is expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or other property
deliverable upon such reclassification, change, consolidation, merger, sale,
conveyance, dissolution, liquidation or winding-up.
Section 13.8. Taxes on Conversion.
The Company will pay any and all documentary, stamp or similar taxes
payable to the United States of America or any political subdivision or taxing
authority thereof or therein in respect of the issue or delivery of shares of
Common Stock on conversion of Notes pursuant thereto; provided, however, that
the Company shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issue or delivery of shares of Common Stock in a
name other than that of the Holder of the Notes to be converted and no such
issue or delivery shall be made unless and until the person requesting such
issue or delivery has paid to the Company the amount of any such tax or has
established, to the satisfaction of the Company, that such tax has been paid.
The Company extends no protection with respect to any other taxes imposed in
connection with conversion of Notes.
Section 13.9. Company to Provide Stock.
The Company shall reserve, free from pre-emptive rights, out of its
authorized but unissued shares, sufficient shares to provide for the conversion
of the Notes from time to time as such Notes are presented for conversion,
provided, that nothing contained herein shall be construed to preclude the
Company from satisfying its obligations in respect of the conversion of Notes by
delivery of repurchased shares of Common Stock which are held in the treasury of
the Company.
If any shares of Common Stock to be reserved for the purpose of
conversion of Notes hereunder require registration with or approval of any
governmental authority under any Federal or state law before such shares may be
validly issued or delivered upon conversion, then the Company covenants that it
will in good faith and as expeditiously as possible use all reasonable efforts
to secure such
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registration or approval, as the case may be, provided, however, that nothing in
this Section 13.9 shall be deemed to limit in any way the obligations of the
Company provided in this Article XIII.
Before taking any action which would cause an adjustment reducing
the Conversion Price below the then par value, if any, of the Common Stock, the
Company will take all corporate action which may, in the Opinion of Counsel, be
necessary in order that the Company may validly and legally issue fully paid and
non-assessable shares of Common Stock at such adjusted Conversion Price.
The Company covenants that all shares of Common Stock which may be
issued upon conversion of Notes will upon issue be fully paid and non-assessable
by the Company and free of preemptive rights.
Section 13.10. Disclaimer of Responsibility for Certain Matters.
Neither the Trustee nor any agent of the Trustee shall at any time
be under any duty or responsibility to any Holder of Notes to determine whether
any facts exist which may require any adjustment of the Conversion Price, or
with respect to the Officers' Certificate referred to in Section 13.5 hereof, or
with respect to the nature or extent of any such adjustment when made, or with
respect to the method employed, or herein or in any supplemental indenture
provided to be employed, in making the same. Neither the Trustee nor any agent
of the Trustee shall be accountable with respect to the validity or value (or
the kind or amount) of any shares of Common Stock, or of any securities or
property (including cash), which may at any time be issued or delivered upon the
conversion of any Note; and neither the Trustee nor any conversion agent makes
any representation with respect thereto. Neither the Trustee nor any agent of
the Trustee shall be responsible for any failure of the Company to issue,
register the transfer of or deliver any shares of Common Stock or stock
certificates or other securities or property (including cash) upon the surrender
of any Note for the purpose of conversion or, subject to Article VII hereof, to
comply with any of the covenants of the Company contained in this Article XIII.
Section 13.11. Return of Funds Deposited for Redemption of Converted Notes.
Any funds which at any time shall have been deposited by the Company
or on its behalf with the Trustee or any other Paying Agent for the purpose of
paying the principal of and interest on any of the Notes and which shall not be
required for such purposes because of the conversion of such Notes, as provided
in this Article XIII, shall after such conversion be repaid to the Company by
the Trustee or such other Paying Agent.
ARTICLE XIV.
MISCELLANEOUS
Section 14.1. TIA Controls.
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If any provision of this Indenture limits, qualifies, or conflicts
with the duties imposed by operation of the TIA, the imposed duties, whether or
not this Indenture has been qualified under the TIA, shall control.
Section 14.2. Notices.
Any notices or other communications to the Company or the Trustee
required or permitted hereunder shall be in writing, and shall be sufficiently
given if made by hand delivery, by telex, by telecopier or registered or
certified mail, postage prepaid, return receipt requested, addressed as follows:
if to the Company:
Cellular Communications International, Inc.
110 East 59th Street
New York, NY 10022
Attention: General Counsel
Telecopy: (212) 906-8497
if to the Trustee:
The Chase Manhattan Bank
450 West 33rd Street
New York, NY 10001
Attn: Corporate Trust Administration
Telecopy: (212) 946-8159
Any party by notice to each other party may designate additional or
different addresses as shall be furnished in writing by such party. Any notice
or communication to any party shall be deemed to have been given or made as of
the date so delivered, if personally delivered; when receipt is acknowledged, if
telecopied; and five Business Days after mailing if sent by registered or
certified mail, postage prepaid (except that a notice of change of address shall
not be deemed to have been given until actually received by the addressee).
Any notice or communication mailed to a Noteholder shall be mailed
to him by first class mail or other equivalent means at his address as it
appears on the registration books of the Registrar and shall be sufficiently
given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other Noteholders.
If a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it except for notices and
communications to the Trustee which shall be effective only upon actual receipt
thereof.
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Section 14.3. Communications by Holders with Other Holders.
Noteholders may communicate pursuant to TIA ss. 312(b) with other
Noteholders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and any other Person shall have the
protection of TIA ss. 312(c).
Section 14.4. 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:
(1) An Officers' Certificate (in form and substance reasonably
satisfactory to the Trustee) stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with; and
(2) an Opinion of Counsel (in form and substance reasonably
satisfactory to the Trustee) stating that, in the opinion of such counsel, all
such conditions precedent have been complied with.
Section 14.5. Statements Required in Certificate or Opinion.
Each certificate or Opinion of Counsel with respect to compliance
with a condition or covenant provided for in this Indenture shall include:
(1) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(2) 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;
(3) a statement that, in the opinion of such Person, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of each such
Person, such condition or covenant has been complied with; provided, however,
that with respect to matters of fact an Opinion of Counsel may rely on an
Officers' Certificate or certificates of public officials.
Section 14.6. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or at a meeting
of Noteholders. The Paying Agent or Registrar may make reasonable rules for its
functions.
Section 14.7. Legal Holidays.
72
<PAGE> 80
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in New York, New York are authorized or obligated by law or
executive order to close. If a payment date is a Legal Holiday at such place,
payment may be made at such place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
Section 14.8. Governing Law.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES THEREOF, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE
STATE OF NEW YORK. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS INDENTURE AND THE NOTES, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID
COURTS. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY
DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF THE TRUSTEE OR ANY NOTEHOLDER TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
Section 14.9. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan
or debt agreement of the Company or any of its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
Section 14.10. No Recourse Against Others.
No direct or indirect partner, employee, stockholder, director or
officer, as such, past, present or future of the Company or any successor
corporation, shall have any personal liability in respect of the obligations of
the Company under the Notes or this Indenture by reason of his, her or its
status as such partner, stockholder, employee, director or officer. Each
Noteholder by accepting a Note waives and releases all such liability. Such
waiver and release are part of the consideration for the issuance of the Notes.
Section 14.11. Successors.
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<PAGE> 81
All agreements of the Company in this Indenture and the Notes shall
bind its successor. All agreements of the Trustee in this Indenture shall bind
its successor.
Section 14.12. Duplicate Originals.
All parties may sign any number of copies or counterparts of this
Indenture. Each signed copy or counterpart shall be an original, but all of them
together shall represent the same agreement.
Section 14.13. Severability.
In case any one or more of the provisions in this Indenture or in
the Notes shall be held invalid, illegal or unenforceable, in any respect for
any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
Section 14.14. Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and headings of the
Articles and the Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
Section 14.15. Qualification of Indenture.
The Company shall qualify this Indenture under the TIA in accordance
with the terms and conditions of the Registration Rights Agreement and shall pay
all costs, fees and expenses (including attorneys' fees for the Company and the
Trustee) incurred in connection therewith, including, but not limited to, costs,
fees and expenses of qualification of this Indenture and printing this Indenture
and the Notes. The Trustee shall be entitled to receive from the Company any
such Officers' Certificates, Opinions of Counsel or other documentation as it
may reasonably request in connection with any such qualification of this
Indenture under the TIA.
Section 14.16. Registration Rights.
Certain Holders of the Notes are entitled to certain registration
rights with respect to such Notes pursuant to, and subject to the terms of, the
Registration Rights Agreement.
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<PAGE> 82
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.
Cellular Communications International, Inc.
By: /s/ Richard J. Lubasch
-----------------------------------------
Name: Richard J. Lubasch
Title: Senior Vice President
75
<PAGE> 83
The Chase Manhattan Bank, as Trustee
By: /s/ Andrew M. Deck
-----------------------------------------
Name: Andrew M. Deck
Title: Vice President
76
<PAGE> 84
EXHIBIT A
[FORM OF NOTE]
Cellular Communications International, Inc.
6% CONVERTIBLE SUBORDINATED NOTES DUE 2005
No.__ CUSIP No.___________
$___________
Cellular Communications International, Inc., a Delaware corporation
(hereinafter called the "Company," which term includes any successors under the
Indenture hereinafter referred to), for value received, hereby promises to pay
to ____________________________, or registered assigns, the principal sum of
_________ Dollars, on April 1, 2005.
Interest Payment Dates: April 1 and October 1; commencing October 1,
1998.
Record Dates: March 15 and September 15.
Reference is made to the further provisions of this Note hereinafter
set forth, which will, for all purposes, have the same effect as if set forth at
this place.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 85
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
Cellular Communications, Internationial,
Inc., a Delaware corporation
By:
-----------------------------------------
Name:
Title:
A-2
<PAGE> 86
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Notes described in the within-mentioned
Indenture.
Dated:___________
The Chase Manhattan Bank, as
Trustee
By:
----------------------------
Authorized Signatory
A-3
<PAGE> 87
Cellular Communications International, Inc.
6% Convertible Subordinated Notes due 2005
Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by The
Depository Trust Company, a New York corporation ("Depositary"), to a nominee of
the Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. Unless this
certificate is presented by an authorized representative of the Depository to
the Company or its agent for registration of transfer, exchange or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of the Depositary (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of the Depositary), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.
[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]
1. Interest.
Cellular Communications International, Inc., a Delaware corporation
(hereinafter called the "Company," which term includes any successors under the
Indenture hereinafter referred to), promises to pay interest on the principal
amount of this Note at the rate of 6% per annum. To the extent it is lawful, the
Company promises to pay interest on any interest payment due but unpaid on such
principal amount at a rate of 1% per annum compounded semi-annually.
The Company will pay interest semi-annually in cash in arrears on April 1
and October 1 of each year (each, an "Interest Payment Date"), commencing
October 1, 1998. Interest on the Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid on the Notes, from
March 18, 1998. Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months.
2. Method of Payment.
The Company shall pay interest on the Notes (except defaulted interest) to
the Persons who are the registered Holders at the close of business on the
Record Date immediately preceding the Interest Payment Date. Holders must
surrender Notes to a Paying Agent to collect principal payments. Any such
interest not so punctually paid, and defaulted interest relating thereto, may be
paid to the Persons who are registered Holders at the close of business on a
Special Record Date for the payment of such defaulted interest, as more fully
provided in the Indenture referred to below. Except as provided below, the
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<PAGE> 88
Company shall pay principal and interest in such coin or currency of the United
States of America as at the time of payment shall be legal tender for payment of
public and private debts ("U.S. Legal Tender"). The Notes will be payable as to
principal, premium, interest and Liquidated Damages at the office or agency of
the Company maintained for such purpose within or without the City and State of
New York, or at the option of the Company, payment of interest and Liquidated
Damages may be made by check mailed to the Holders of the Notes at the addresses
set forth upon the registry books of the Company, and provided that, upon the
request of The Depository Trust Company, a New York corporation (the
"Depositary"), payment by wire transfer of immediately available funds will be
required with respect to principal of, premium and interest on and Liquidated
Damages with respect to Global Notes and all other Notes held of record by the
Depositary, or its nominee, if the Depositary shall have provided wire transfer
instructions to the Company or the Paying Agent.
No service charge will be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
3. Paying Agent and Registrar.
The Chase Manhattan Bank (the "Trustee") will act as Paying Agent and
Registrar. The Company may change any Paying Agent, Registrar or co-Registrar
without notice to the Holders. The Company or any of its Subsidiaries may,
subject to certain exceptions, act as Paying Agent, Registrar or co-Registrar.
4. Indenture.
The Company issued the Notes under an Indenture, dated as of March 18,
1998 (as amended or supplemented from time to time the "Indenture"), between the
Company and the Trustee. Capitalized terms herein are used as defined in the
Indenture unless otherwise defined herein. 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, as in effect on the date of the Indenture. The Notes are
subject to all such terms, and Holders of Notes are referred to the Indenture
and said Act for a statement of them. The Notes are general unsecured
obligations of the Company limited in aggregate principal amount to $86,250,000.
5. Redemption.
The Notes may be redeemed in whole or from time to time in part at any
time on and after April 4, 2001, at the option of the Company, at the Redemption
Price (expressed as a percentage of principal amount) set forth below with
respect to the indicated Redemption Date, in each case, plus any accrued but
unpaid interest and Liquidated Damages to the Redemption Date. The Notes may not
be so redeemed prior to April 4, 2001.
A-5
<PAGE> 89
<TABLE>
<CAPTION>
If redeemed during
the 12-month period
beginning on April 1
of the years indicated
below (April 4, in the
case of the year 2001) Redemption Price
----------------------- ----------------
<S> <C>
2001................................103.429%
2002................................102.571%
2003................................101.714%
2004................................100.857%
2005................................100.000%
</TABLE>
Any such redemption will comply with Article III of the Indenture.
6. Notice of Redemption.
Notice of redemption will be sent by first class mail, at least 30 days
and not more than 60 days prior to the Redemption Date to the Holder of each
Note to be redeemed at such Holder's last address as then shown upon the
registry books of the Registrar. Notes may be redeemed in part in integral
multiples of $1,000 only.
Except as set forth in the Indenture, from and after any Redemption Date,
if monies for the redemption of the Notes called for redemption shall have been
deposited with the Paying Agent on such Redemption Date and payment of the Notes
called for redemption is not prohibited under Article XII of the Indenture, the
Notes called for redemption will cease to bear interest and the only right of
the Holders of such Notes will be to receive payment of the Redemption Price,
plus any accrued and unpaid interest and Liquidated Damages, if any, to the
Redemption Date.
7. Denominations; Transfer; Exchange.
The Notes are in registered form, without coupons, in denominations of
$1,000 and integral multiples of $1,000. A Holder may register the transfer of
or exchange Notes in accordance with, the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not register the transfer of or exchange any Notes
selected for redemption.
8. Persons Deemed Owners.
The registered Holder of a Note may be treated as the owner of it for all
purposes, subject to the provisions of the Indenture and the Notes with respect
to record dates.
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<PAGE> 90
9. Unclaimed Money.
If money for the payment of principal, interest or Liquidated Damages
remains unclaimed for two years, the Trustee and the Paying Agent(s) will pay
the money back to the Company at its written request. After that, all liability
of the Trustee and such Paying Agent(s) with respect to such money shall 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.
10. Amendment; Supplement; Waiver.
Subject to specified exceptions, the Indenture or the Notes may be amended
or supplemented, and any existing Default or Event of Default or compliance with
any provision may be waived, with the written consent of the Holders of a
majority in aggregate principal amount of the Notes then outstanding. Without
notice to or consent of any Holder, the parties thereto may amend or supplement
the Indenture or the Notes to, among other things, cure any ambiguity, defect or
inconsistency, or make any other change that does not adversely affect the
rights of any Holder of a Note.
11. Conversion Rights.
Subject to the provisions of the Indenture, the Holders have the right to
convert the principal amount of the Notes into fully paid and nonassessable
shares of Common Stock of the Company at the initial conversion price per share
of Common Stock of $59.92 (which reflects a conversion rate of 16.6884 shares of
Common Stock per $1,000 in principal amount of Notes), or at the adjusted
conversion price then in effect, if adjustment has been made as provided in the
Indenture, upon surrender of the Note to the Company, together with a fully
executed notice in substantially the form attached hereto and, if required by
the Indenture, an amount equal to accrued interest payable on such Note.
12. Ranking.
Payment of principal, premium, if any, interest on and Liquidated Damages
with respect to the Notes is subordinated, in the manner and to the extent set
forth in the Indenture, to the prior payment in full of all Senior Indebtedness.
13. Repurchase at Option of Holder Upon a Change of Control.
If there is a Change of Control, the Company shall be required, subject to
the provisions of the Indenture, to offer to purchase on the Repurchase Date all
outstanding Notes at a purchase price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest and Liquidated Damages, if any, to the
Repurchase Date. Holders of Notes will receive a Repurchase Offer from the
Company prior to any related Repurchase Date and may elect to have such Notes
purchased by completing the form entitled "Option of Holder to Elect Purchase"
appearing below.
A-7
<PAGE> 91
14. Successors.
When a successor assumes all the obligations of its predecessor under the
Notes and the Indenture, the predecessor will be released from those
obligations.
15. Defaults and Remedies.
If an Event of Default occurs and is continuing (other than an Event of
Default relating to certain events of bankruptcy, insolvency or reorganization),
then in every such case, unless the principal of all of the Notes shall have
already become due and payable, either the Trustee or the Holders of 25% in
aggregate principal amount of Notes then outstanding may declare all the Notes
to be due and payable immediately in the manner and with the effect provided in
the Indenture. Holders of Notes may not enforce the Indenture or the Notes
except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of a majority in aggregate principal amount of the
Notes then outstanding may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of Notes notice of any continuing
Default or Event of Default (except a Default in payment of principal, interest
or Liquidated Damages), if it determines that withholding notice is in their
interest.
16. Trustee Dealings with Company.
The Trustee under the Indenture, 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.
17. No Recourse Against Others.
No stockholder, director, officer or employee, as such, past, present or
future, of the Company or any successor corporation shall have any personal
liability in respect of the obligations of the Company under the Notes or the
Indenture by reason of his, her or its status as such stockholder, director,
officer or employee. Each Holder of a Note 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.
18. Authentication.
This Note shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on this Note.
19. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a Note 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).
A-8
<PAGE> 92
20. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Notes as a convenience to the Holders of the Notes. No
representation is made as to the accuracy of such numbers as printed on the
Notes and reliance may be placed only on the other identification numbers
printed hereon.
21. Additional Rights of Holders of Transfer Restricted Notes.
In addition to the rights provided to Holders of Notes under the
Indenture, Holders of Notes shall have all the rights set forth in the
Registration Rights Agreement.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement. Request
may be made to:
Cellular Communications International, Inc.
110 East 59th Street
New York, NY 10022
Attn: General Counsel
A-9
<PAGE> 93
[FORM OF ASSIGNMENT]
I or we assign this Note to
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code of assignee)
Please insert Social Note or other identifying number of assignee
_________________________
and irrevocably appoint __________________ agent to transfer this Note on the
books of the Company. The agent may substitute another to act for him.
Dated:____________________ Signed:__________________________________
(Sign exactly as your name appears
on the other side of this Note)
Signature Guarantee:_____________________
Signatures must be guarantied by an
"eligible guarantor institution" meeting the
requirements of the Registrar, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guaranty program" as may be
determined by the Registrar in addition to,
or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
A-10
<PAGE> 94
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant
to Article XI of the Indenture, check the box: |_|
If you want to elect to have only part of this Note purchased by the
Company pursuant to Article XI of the Indenture, state the amount you want to be
purchased: $
Dated:____________________ Signed:__________________________________
(Sign exactly as your name appears
on the other side of this Note)
Signature Guarantee:_____________________
Signatures must be guarantied by an
"eligible guarantor institution" meeting the
requirements of the Registrar, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guaranty program" as may be
determined by the Registrar in addition to,
or in substitution for, STAMP, all in
accordance with the Securities Exchange Act
of 1934, as amended.
A-11
<PAGE> 95
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>
Amount of Amount of Principal Amount
decrease in increase in at maturity of Signature of
Principal Principal this Global Note authorized
Amount Amount following such officer of
Date of at maturity of at maturity of decrease Trustee or
Exchange this Global Note this Global Note (or increase) Note Custodian
- -------- ---------------- ---------------- ------------- --------------
<S> <C> <C> <C> <C>
</TABLE>
A-12
<PAGE> 96
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF NOTES
Re: 6% CONVERTIBLE SUBORDINATED NOTES DUE 2005
This Certificate relates to $____________ principal amount of Notes held
in * ____________ book-entry or * ____________ definitive form by
____________________________ (the "Transferor").
1. The Transferor:*
|_| (a) has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Note held by the Depositary a Note or
Notes in definitive, registered form of authorized denominations and an
aggregate principal amount equal to its beneficial interest in such Global Note
(or the portion thereof indicated above); or
|_| (b) has requested the Trustee by written order to exchange or register the
transfer of a Note or Notes.
2. In connection with any such request and in respect of each such Note,
the Transferor does hereby certify that Transferor is familiar with the
Indenture relating to the above-captioned Notes and as provided in Section 2.6
of such Indenture, the transfer of this Note does not require registration under
the Securities Act because:*
|_| (a) Such Note is being acquired for the Transferor's own account, without
transfer (in satisfaction of Section 2.6(a)(ii)(A) or Section 2.6(d)(i)(A) of
the Indenture).
|_| (b) Such Note is being transferred to a person who the Transferor
reasonably believes is a "qualified institutional buyer" (as defined in Rule
144A under the Securities Act) purchasing for its own account or for the account
of a qualified institutional buyer over which it exercises sole investment
discretion that is aware that the transfer is being made in reliance on Rule
144A (in satisfaction of Section 2.6(a)(ii)(B), Section 2.6(b)(i)(x) or Section
2.6(d)(i)(B) of the Indenture).
|_| (c) Such Note is being transferred in accordance with Regulation S under
the Securities Act (in satisfaction of Section 2.6(a)(ii)(D), Section
2.6(b)(i)(y) or Section 2.6(d)(i)(D) of the Indenture). If requested by either
the Company or the Trustee, an Opinion of Counsel to the effect that such
transfer does not require registration under the Securities Act accompanies this
Certificate (in satisfaction of Section 2.6(a)(ii)(D) or Section 2.6(d)(i)(D) of
the Indenture).
|_| (d) Such Note is being transferred to an institutional investor that is an
"accredited investor" within the meaning of Rule 501(a)(1),(2),(3) or (7) under
the Securities Act which delivers a certificate
- ----------
* Check applicable box.
A-13
<PAGE> 97
in the form of Exhibit B to the Indenture to the Trustee (in satisfaction of
Section 2.6(a)(ii)(C) or Section 2.6(d)(i)(C) of the Indenture), and an opinion
of counsel, if the Company or the Trustee so requests.
|_| (e) Such Note is being transferred in reliance on and in compliance with
another exemption from the registration requirements of the Securities Act. If
requested by either the Company or the Trustee, an Opinion of Counsel to the
effect that such transfer does not require registration under the Securities Act
accompanies this Certificate (in satisfaction of Section 2.6(a)(ii)(E) or
Section 2.6(d)(i)(E) of the Indenture).
____________________________________
[INSERT NAME OF TRANSFEROR]
By:_________________________________
Date:______________________
3. Affiliation with the Company [check if applicable]
|_| (a) The undersigned represents and warrants that it is, or at some time
during which it held this Note was, an Affiliate of the Company.
(b) If 3(a) above is checked and if the undersigned was not an Affiliate
of the Company at all times during which it held this Note, indicate
the periods during which the undersigned was an Affiliate of the
Company:
________________________________________________.
(c) If 3(a) above is checked and if the Transferee will not pay the full
purchase price for the transfer of this Note on or prior to the date
of transfer indicate when such purchase price will be paid:
________________________________________________.
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<PAGE> 98
TO BE COMPLETED BY TRANSFEREE IF 2(b) ABOVE IS CHECKED AND THE TRANSFEROR IS NOT
A QUALIFIED INSTITUTIONAL BUYER:
The undersigned represents and warrants that it is a "qualified
institutional buyer" as defined in Rule 144A under the Securities Act of 1933,
as amended, and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information.
Dated:_____________________ ___________________________________________
NOTICE: To be executed by an officer.
TO BE COMPLETED BY TRANSFEREE IF 2(c) ABOVE IS CHECKED:
The undersigned represents and warrants that it is not a "U.S. Person" (as
defined in Regulation S under the Securities Act of 1933, as amended).
Dated:_____________________ ___________________________________________
NOTICE: To be executed by an officer.
If none of the boxes under Section 2 of this certificate is checked or if any of
the above representations required to be made by the Transferee is not made, the
Registrar shall not be obligated to register this Note in the name of any person
other than the Holder hereof.
THE UNDERSIGNED HEREBY AGREES THAT, UNLESS THE BOX ABOVE UNDER ITEM 3(a) IS
CHECKED, THE UNDERSIGNED SHALL BE DEEMED TO HAVE REPRESENTED THAT IT IS NOT NOR
HAS IT BEEN AT ANY TIME DURING WHICH IT HELD THIS SECURITY AN AFFILIATE, AS
DEFINED IN RULE 144 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OF THE
COMPANY.
Dated:_____________________ ___________________________________________
NOTICE: The signature of the Holder to this
assignment must correspond with the
name as written upon the face of
this Note particular, without
alteration or enlargement or any
change whatsoever.
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<PAGE> 99
EXHIBIT B
Accredited Investor Letter
Cellular Communications International, Inc.
c/o the Trustee
Ladies and Gentlemen:
This letter is delivered by the undersigned to request a transfer of
$_____________ principal amount of the 6% Convertible Subordinated Notes due
2005 (the "Notes") of Cellular Communications International, Inc. (the
"Company"). The Notes are described in that certain Offering Memorandum (the
"Offering Memorandum") dated March 11, 1998 relating to the offering of the
Notes. We acknowledge receipt of the Offering Memorandum and acknowledge that we
have read the Offering Memorandum, have had access to such financial and other
information and have been afforded the opportunity to ask such questions of
representatives of the Company and receive answers thereto, as we deem necessary
in connection with our decision to purchase the Notes.
Upon transfer the Notes would be registered in the name of the
undersigned:
Name:____________________________________________________________
Address:_________________________________________________________
Taxpayer ID Number:______________________________________________
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the
"Securities Act")), purchasing for our own account or for the account of such an
institutional "accredited investor," and we are acquiring the Notes for
investment purposes and not with a view to, or for offer or sale in connection
with, any distribution in violation of the Securities Act and we have such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risk of our investment in the Notes and invest in or
purchase securities similar to the Notes in the normal course of our business,
and we, and any account for which we are acting, are each able to bear the
economic risk of our or its investment. We confirm that neither the Company nor
any person acting on its behalf has offered to sell the Notes by, and that we
have not been made aware of the offering of the Notes by, any form of general
solicitation or general advertising, including, but not limited to, any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio.
B-1
<PAGE> 100
2. We understand that the Notes and the Common Stock issuable upon
conversion of the Notes (the Notes and such Common Stock are collectively
referred to herein as the "Restricted Securities") have not been registered
under the Securities Act, or any state securities laws, and, unless so
registered, may not be sold except as permitted in the following sentence. We
agree on our own behalf and on behalf of any investor account for which we are
purchasing Notes that such Restricted Securities are "restricted securities"
within the meaning of Rule 144 under the Securities Act and to offer, sell or
otherwise transfer such Restricted Securities prior to the date which is two
years after the date of original issue (the "Resale Restriction Termination
Date") only (a) to the Company or any of its subsidiaries, (b) so long as the
Restricted Securities are eligible for resale pursuant to Rule 144A under the
Securities Act, to a person we reasonably believe is a qualified institutional
buyer under Rule 144A under the Securities Act (a "QIB") that purchases for its
own account or for the account of a QIB and to whom notice is given that the
transfer is being made in reliance on Rule 144A, (c) to an institutional
"accredited investor," within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act, that is purchasing for its own account or for the
account of an institutional "accredited investor," (d) pursuant to offers and
sales that occur outside the United States within the meaning of Regulation S
under the Securities Act, (e) in a transaction meeting the requirements of Rule
144 under the Securities Act, (f) pursuant to any other available exemption from
the registration requirements of the Securities Act, or (g) pursuant to a
registration statement that has been declared effective under the Securities
Act, subject in each of the foregoing cases to any requirement of law that the
disposition of our property or the property of such investor account or accounts
be at all times within our or their control and in compliance with any
applicable state securities laws. The foregoing restrictions on resale will not
apply subsequent to the Resale Restriction Termination Date. If any resale or
other transfer of the Restricted Securities is proposed to be made pursuant to
clause (c) above prior to the Resale Restriction Termination Date, the
transferor shall deliver a letter from the transferee substantially in the form
of this letter to the Company and the trustee (the "Trustee") under the
indenture, dated as of March __, 1998 between the Company and the Trustee
relating to the Notes, which shall provide, among other things, that the
transferee is an institutional "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act and that it is acquiring
such Restricted Securities for investment purposes and not for distribution in
violation of the Securities Act. Each purchaser acknowledges that the Company
and the Trustee reserve the right prior to any offer, sale or other transfer,
prior to the Resale Restriction Termination Date, of the Restricted Securities
pursuant to clause (c), (d) or (f) above to require the delivery of an opinion
of counsel, certifications and/or other information satisfactory to the Company
and the Trustee.
3. We understand that the Notes will be in the form of definitive physical
certificates bearing the legend set forth in clause (5) in the "Notice to
Investors" section of the Offering Memorandum.
We acknowledge that you, the Initial Purchasers and others will rely upon
our confirmations, acknowledgments and agreements set forth herein, and we agree
to notify you promptly in writing if any of our representations and warranties
herein ceases to be accurate and complete.
B-2
<PAGE> 101
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES
THEREOF.
By:_________________________________
B-3
<PAGE> 102
EXHIBIT C
FORM OF CONVERSION NOTICE
TO: Cellular Communications International, Inc.
The undersigned owner of this Note hereby: (i) irrevocably exercises the
option to convert this Note, or the portion hereof below designated, for shares
of Common Stock of Cellular Communications International, Inc. in accordance
with the terms of the Indenture referred to in this Note and (ii) directs that
such shares of Common Stock deliverable upon the conversion, together with any
check in payment for fractional shares and any Note(s) representing any
unconverted principal amount hereof, be issued and delivered to the registered
holder hereof unless a different name has been indicated below. If shares are to
be delivered registered in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect thereto. Any amount
required to be paid by the undersigned on account of interest accompanies this
Note.
Dated:_____________________________
____________________________________
Signature
Fill in for registration of shares if to be delivered, and of Notes if to
be issued, otherwise than to and in the name of the registered holder.
____________________________________
Social Security or other
Taxpayer Identifying Number
___________________________
(Name)
___________________________
(Street Address)
___________________________
City, State and Zip Code)
(Please print name and address)
Principal amount to be converted
(if less than all)
$_______________________________
<PAGE> 1
- --------------------------------------------------------------------------------
6% CONVERTIBLE SUBORDINATED NOTES DUE 2005
REGISTRATION RIGHTS AGREEMENT
Dated March 18, 1998
by and among
CELLULAR COMMUNICATIONS INTERNATIONAL, INC.
as the Issuer
and
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
and
WASSERSTEIN PERELLA SECURITIES, INC.
as the Initial Purchasers
- --------------------------------------------------------------------------------
<PAGE> 2
This Registration Rights Agreement (this "Agreement") is made and entered
into as of March 18, 1998, by and between Cellular Communications International,
Inc., a Delaware corporation (the "Company"), and Donaldson, Lufkin & Jenrette
Securities Corporation and Wasserstein Perella Securities, Inc. (each an
"Initial Purchaser" and, collectively, the "Initial Purchasers"), each of whom
has agreed to purchase, severally and not jointly, the Company's 6% Convertible
Subordinated Notes due 2005 (the "Notes") pursuant to the Purchase Agreement (as
defined below).
This Agreement is made pursuant to the Purchase Agreement, dated March 11,
(the "Purchase Agreement"), by and among the Company and the Initial Purchasers.
In order to induce the Initial Purchasers to purchase the Notes, the Company has
agreed to provide the registration rights set forth in this Agreement. The
execution and delivery of this Agreement is a condition to the obligations of
the Initial Purchasers set forth in Section 9 of the Purchase Agreement.
Capitalized terms used herein and not otherwise defined shall have the meaning
assigned to them in the Indenture, dated March 18, 1998, between the Company and
The Chase Manhattan Bank, as Trustee, relating to the Notes (the "Indenture").
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Act: The Securities Act of 1933, as amended.
Affiliate: As defined in Rule 144 of the Act.
Certificated Securities: Definitive Notes, as defined in the Indenture.
Closing Date: The date hereof.
Common Stock: Common Stock, $0.01 par value per share, of the Company.
Commission: The Securities and Exchange Commission.
Effectiveness Deadline: As defined in Section 3(a) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exempt Resales: The transactions in which the Initial Purchasers propose
to sell the Notes to certain "qualified institutional buyers," as such term is
defined in Rule 144A under the Act and pursuant to Regulation S under the Act.
Filing Deadline: As defined in Sections 3(a) hereof.
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<PAGE> 3
Holders: As defined in Section 2 hereof.
Notes: The up to $86,250,000 aggregate principle amount of 6% Convertible
Subordinated Notes being issued pursuant to the Purchase Agreement.
Prospectus: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, all material incorporated by reference into
such Prospectus and any information previously omitted in reliance upon Rule
430A of the Act.
Recommencement Date: As defined in Section 5(d) hereof.
Registration Default: As defined in Section 4 hereof.
Regulation S: Regulation S promulgated under the Act.
Rule 144: Rule 144 promulgated under the Act.
Senior Discount Notes: The Company's 9 1/2% Series A Senior Discount Notes
due 2005 to be issued pursuant to the Purchase Agreement concurrently with the
Notes.
Shelf Registration Statement: As defined in Section 3 hereof.
Suspension Notice: As defined in Section 5(d) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as
in effect on the date of the Indenture.
Transfer Restricted Securities: The Notes and the shares of Common Stock
into which the Notes are convertible, upon original issuance thereof, and at all
times subsequent thereto, until, in the case of any such Notes or shares of
Common Stock, (a) the date on which such Notes or shares of Common Stock have
been disposed of in accordance with a Shelf Registration Statement, (b) the date
on which such Notes or shares of Common Stock are distributed to the public
pursuant to Rule 144 or are saleable pursuant to Rule 144 (or similar provisions
then in effect) under the Act or (c) the date on which such Notes or shares of
Common Stock cease to be outstanding.
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "Holder") whenever such Person owns Transfer Restricted Securities.
2
<PAGE> 4
SECTION 3. SHELF REGISTRATION
(a) Shelf Registration. As soon as practicable after the Closing Date but
in no event later than 90 days after the Closing Date (the such 90th day,
"Filing Deadline"), the Company shall file with the Commission a shelf
registration statement pursuant to Rule 415 under the Act (the "Shelf
Registration Statement"), relating to all Transfer Restricted Securities, and
shall use its best efforts to cause such Shelf Registration Statement to become
effective on or prior to 150 days after the Closing Date (such 150th day, the
"Effectiveness Deadline").
The Company shall use all reasonable efforts to keep any Shelf
Registration Statement required by this Section 3(a) continuously effective,
supplemented and amended as required by and subject to the provisions of
Sections 5(a) and (b) hereof to the extent necessary to ensure that it is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 3(a), and to ensure that it conforms
with the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, two years (as
extended pursuant to Section 5(c) following the Closing Date), or such earlier
date when Holders are able to sell such Transfer Restricted Securities without
restriction pursuant to Rule 144(k) under the Securities Act or any successor
rule thereto or otherwise or such shorter period ending with either (i) the date
on which all Transfer Restricted Securities covered by such Shelf Registration
Statement have been sold pursuant thereto or (ii) there cease to be any
outstanding Transfer Restricted Securities.
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to liquidated damages pursuant to
Section 4 hereof unless and until such Holder shall have provided all such
information. Each selling Holder agrees to promptly furnish additional
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.
SECTION 4. LIQUIDATED DAMAGES
If (i) the Shelf Registration Statement is not filed with the Commission
on or prior to the Filing Deadline, (ii) such Shelf Registration Statement has
not been declared effective by the Commission on or prior to the Effectiveness
Deadline, or (iii) such Shelf Registration Statement required by this Agreement
is filed and declared effective but shall thereafter cease to be effective or
fail to be usable for a period of time which shall exceed 90 days in the
aggregate during any 365 day period for its intended purpose without being
succeeded immediately by a post-effective amendment to such Shelf Registration
Statement that cures such failure and that is itself declared effective
immediately (each such event referred to in clauses (i) through (iii), a
"Registration
3
<PAGE> 5
Default"), then the Company hereby agrees to pay to each Holder of Transfer
Restricted Securities affected thereby liquidated damages in an amount equal to
$.05 per week per $1,000 in principal amount or, if applicable, an equivalent
amount per share of Common Stock of Transfer Restricted Securities, as
applicable, held by such Holder for each week or portion thereof that the
Registration Default continues for the first 90-day period immediately following
the occurrence of such Registration Default. The amount of the liquidated
damages shall increase by an additional $.05 per week per $1,000 in principal
amount or, if applicable, an equivalent amount per share of Common Stock of
Transfer Restricted Securities with respect to each subsequent 90-day period
until all Registration Defaults have been cured, up to a maximum amount of
liquidated damages of $.50 per week per $1,000 in principal amount or, if
applicable, an equal amount per share of Common Stock of Transfer Restricted
Securities; provided that the Company shall in no event be required to pay
liquidated damages for more than one Registration Default at any given time.
Notwithstanding anything to the contrary set forth herein, (1) upon filing of
the Shelf Registration Statement, in the case of (i) above, (2) upon the
effectiveness of this Shelf Registration Statement, in the case of (ii) above,
or (3) upon the filing of a post-effective amendment to the Shelf Registration
Statement that causes the Shelf Registration Statement to again be declared
effective or made usable, in the case of (iii) above, the liquidated damages
payable with respect to the Transfer Restricted Securities as a result of such
clause (i), (ii), or (iii), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each Interest Payment Date as more fully set forth in the Indenture and the
Notes. Notwithstanding the fact that any Notes and/or shares of Common Stock for
which liquidated damages are due cease to be Transfer Restricted Securities, all
obligations of the Company to pay liquidated damages with respect to any such
Notes and/or shares of Common Stock shall survive until such time as all such
obligations shall have been satisfied in full.
SECTION 5. SHELF REGISTRATION PROCEDURES
In connection with the Shelf Registration Statement, the Company shall:
(a) use all reasonable efforts to effect such registration to permit the
sale of the Transfer Restricted Securities being sold in accordance with the
intended method or methods of distribution thereof (as indicated in the
information furnished to the Company pursuant to Section 3(b) hereof), and
pursuant thereto the Company will prepare and file with the Commission a Shelf
Registration Statement relating to the registration on any appropriate form
under the Act, which form shall be available for the sale of the Transfer
Restricted Securities in accordance with the intended method or methods of
distribution thereof (including, without limitation, one or more underwritten
offerings) within the time periods and otherwise in accordance with the
provisions hereof. The Company shall not be permitted to include in the Shelf
Registration Statement any securities other than the Transfer Restricted
Securities.
4
<PAGE> 6
(b) use all reasonable efforts to contact all Holders of Transfer
Restricted Securities and notify each Holder of its right to include its
Transfer Restricted Securities in such Shelf Registration Statement.
(c) use all reasonable efforts to keep such Shelf Registration Statement
continuously effective and provide all requisite financial statements for the
period specified in Section 3 of this Agreement. Upon the occurrence of any
event that would cause any such Shelf Registration Statement or the Prospectus
contained therein (i) to contain an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein not
misleading or (ii) not to be effective and usable for resale of Transfer
Restricted Securities during the period required by this Agreement, the Company
shall file promptly an appropriate amendment to such Shelf Registration
Statement curing such defect, and, if Commission review is required, use its
best efforts to cause such amendment to be declared effective as soon as
practicable.
(d) use all reasonable efforts to prepare and file with the Commission
such amendments and post-effective amendments to the Shelf Registration
Statement as may be necessary to keep such Shelf Registration Statement
effective for the applicable period set forth in Section 3 hereof, cause the
Prospectus to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully
with Rules 424, 430A and 462, as applicable, under the Act in a timely manner;
and comply with the provisions of the Act with respect to the disposition of all
Transfer Restricted Securities covered by such Shelf Registration Statement
during the applicable period in accordance with the intended method or methods
of distribution by the sellers thereof set forth in such Shelf Registration
Statement or supplement to the Prospectus;
(e) advise the Holders and underwriters, if any, promptly and, if
requested by such Persons, confirm such advice in writing, (i) when the
Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to any Shelf Registration Statement or any
post-effective amendment thereto, when the same has become effective, (ii) of
any request by the Commission for amendments to the Shelf Registration Statement
or amendments or supplements to the Prospectus or for additional information
relating thereto, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Shelf Registration Statement under the Act
or of the suspension by any state securities commission of the qualification of
the Transfer Restricted Securities for offering or sale in any jurisdiction, or
the initiation of any proceeding for any of the preceding purposes, (iv) of the
existence of any fact or the happening of any event that makes any statement of
a material fact made in the Shelf Registration Statement, the Prospectus, any
amendment or supplement thereto or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes in
the Shelf Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or changes in the
Prospectus in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If at any time the
Commission shall issue any stop order suspending the effectiveness of the Shelf
Registration Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state securities or
Blue
5
<PAGE> 7
Sky laws, the Company shall use all reasonable efforts to obtain the withdrawal
or lifting of such order at the earliest possible time;
(f) subject to Section 5(c), if any fact or event contemplated by Section
5(e)(iv) above shall exist or have occurred, prepare a supplement or
post-effective amendment to the Shelf Registration Statement or related
Prospectus or any document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(g) furnish to each Holder named in any Shelf Registration Statement or
Prospectus and underwriter, if any, in connection with such sale before filing
with the Commission, copies of any Shelf Registration Statement or any
Prospectus included therein or any amendments or supplements to any such Shelf
Registration Statement or Prospectus (including all documents incorporated by
reference after the initial filing of such Shelf Registration Statement), which
documents will be subject to the review and comment of such Persons in
connection with such sale, if any, for a period of at least five Business Days,
and the Company will not file any such Shelf Registration Statement or
Prospectus or any amendment or supplement to any such Shelf Registration
Statement or Prospectus (including all such documents incorporated by reference)
to which such Persons shall reasonably object within five Business Days after
the receipt thereof. Any such Person shall be deemed to have reasonably objected
to such filing if such Registration Statement, amendment, Prospectus or
supplement, as applicable, as proposed to be filed, contains an untrue statement
of a material fact or omits to state any material fact necessary to make the
statements therein not misleading or fails to comply with the applicable
requirements of the Act;
(h) promptly prior to the filing of any document that is to be
incorporated by reference into a Shelf Registration Statement or Prospectus,
provide copies of such document to the Holders, and underwriters, if any, in
connection with such sale, make the Company's representatives available for
discussion of such document and other customary due diligence matters, and
include such information in such document prior to the filing thereof as such
Holders may reasonably request;
(i) make available at reasonable times for inspection by the Holders and
underwriters, if any, and any attorney or accountant retained by such Holders,
or underwriters, if any, all financial and other records, pertinent corporate
documents of the Company and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such Holder,
underwriters, if any, attorney or accountant in connection with such Shelf
Registration Statement or any post-effective amendment thereto subsequent to the
filing thereof and prior to its effectiveness; provided, however, that such
persons shall first agree in writing with the Company that any information that
is reasonably and in good faith designated by the Company in writing as
confidential at the time of delivery of such information shall be kept
confidential by such persons, unless (i) disclosure of such information is
required by court or administrative order or is necessary to respond to inquires
of regulatory authorities, (ii) disclosure of such information is required by
6
<PAGE> 8
law (including any disclosure requirements pursuant to Federal securities laws
in connection with the filing of any Registration Statement or the use of any
Prospectus referred to in this Agreement), (iii) such information becomes
generally available to the public other than as a result of a disclosure or
failure to safeguard by any such person or (iv) such information becomes
available to any such person from a source other than the Company and such
source is not bound by a confidentiality agreement.
(j) if requested by any Holders or underwriters, if any, in connection
with such sale, promptly include in any Shelf Registration Statement or
Prospectus, pursuant to a supplement or post-effective amendment if necessary,
such information as such Holders or underwriters, if any, may reasonably request
to have included therein, including, without limitation, information relating to
the "Plan of Distribution" of the Transfer Restricted Securities; and make all
required filings of such Prospectus supplement or post-effective amendment as
soon as practicable after the Company is notified of the matters to be included
in such Prospectus supplement or post-effective amendment;
(k) furnish to each Holder and underwriter, if any, without charge, at
least one copy of the Shelf Registration Statement, as first filed with the
Commission, and of each amendment thereto, including all documents incorporated
by reference therein and all exhibits (including exhibits incorporated therein
by reference);
(l) deliver to each Holder and underwriter, if any, without charge, as
many copies of the Prospectus (including each preliminary prospectus) and any
amendment or supplement thereto as such Persons reasonably may request; the
Company hereby consents to the use (in accordance with law) of the Prospectus
and any amendment or supplement thereto by each Holder and each underwriter, if
any, in connection with the offering and the sale of the Transfer Restricted
Securities covered by the Prospectus or any amendment or supplement thereto;
(m) upon the request of any Holder or underwriter, if any, enter into such
agreements (including underwriting agreements) and make such representations and
warranties and take all such other actions in connection therewith in order to
expedite or facilitate the disposition of the Transfer Restricted Securities
pursuant to any Shelf Registration Statement contemplated by this Agreement as
may be reasonably requested by such Person in connection with any sale or resale
pursuant to any applicable Shelf Registration Statement and in such connection,
the Company shall:
(A)upon request of any Holder or underwriter, if any, furnish (or in the
case of paragraphs (2) and (3) below, use all reasonable efforts to
cause to be furnished) to each Holder or underwriter, if any, upon the
effectiveness of the Shelf Registration Statement:
(1)a certificate, dated such date, signed on behalf of the Company by
(x) the President or any Vice President and (y) a principal
financial or accounting officer of the Company, confirming, as of
the date thereof, the matters set forth in Sections 6(ff), 9(a) and
9(b) of the Purchase Agreement and such other similar matters as the
Holders may reasonably request;
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<PAGE> 9
(2)an opinion, dated the date effectiveness of the Shelf Registration
Statement, of counsel for the Company covering matters similar to
those set forth in paragraph (e), (f) and (g) of Section 9 of the
Purchase Agreement and such other matter as the selling Holders may
reasonably request, and in any event including a statement to the
effect that such counsel has participated in conferences with
officers and other representatives of the Company, representatives
of the independent public accountants for the Company and have
considered the matters required to be stated therein and the
statements contained therein, although such counsel has not
independently verified the accuracy, completeness or fairness of
such statements; and that such counsel advises that, on the basis of
the foregoing (relying as to materiality to the extent such counsel
deems appropriate upon the statements of officers and other
representatives of the Company) and without independent check or
verification), no facts came to such counsel's attention that caused
such counsel to believe that the Shelf Registration Statement, at
the time such Shelf Registration Statement or any post-effective
amendment thereto became effective, contained an untrue statement of
a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or that the Prospectus contained in such Shelf
Registration Statement as of its date, contained an untrue statement
of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Without
limiting the foregoing, such counsel may state further that such
counsel assumes no responsibility for, and has not independently
verified, the accuracy, completeness or fairness of the financial
statements, notes and schedules and other financial data included in
any Registration Statement contemplated by this Agreement or the
related Prospectus; and
(3)a customary comfort letter, dated as of the date of effectiveness
of the Shelf Registration Statement from the Company's independent
accountants, in the customary form and covering matters of the type
customarily covered in comfort letters to underwriters in connection
with underwritten offerings, and affirming the matters set forth in
the comfort letters delivered pursuant to Section 9(i) of the
Purchase Agreement; and
(B)deliver such other documents and certificates as may be reasonably
requested by the Holders and underwriters, if any, to evidence
compliance with the matters set forth in clause (A) above and with any
customary conditions contained in the any agreement entered into by the
Company pursuant to this clause (m);
(n) prior to any public offering of Transfer Restricted Securities,
cooperate with the Holders, underwriters, if any, and their respective counsel
in connection with the registration and qualification of the Transfer Restricted
Securities under the securities or Blue Sky laws of such jurisdictions as such
Persons may request and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Transfer
Restricted Securities covered by the applicable Registration Statement;
provided, however, that the Company shall not
8
<PAGE> 10
be required to register or qualify as a foreign corporation where it is not now
so qualified or to take any action that would subject it to the service of
process in suits or to taxation, other than as to matters and transactions
relating to the Shelf Registration Statement, in any jurisdiction where it is
not now so subject;
(o) in connection with any sale of Transfer Restricted Securities that
will result in such securities no longer being Transfer Restricted Securities,
cooperate with the Holders to facilitate the timely preparation and delivery of
certificates representing Transfer Restricted Securities to be sold and not
bearing any restrictive legends; and to register such Transfer Restricted
Securities in such denominations and such names as the Holders may request at
least two Business Days prior to such sale of Transfer Restricted Securities;
(p) (i) use all reasonable efforts to list all Shares of Common Stock
covered by such Shelf Registration Statement on any securities exchange on which
the Common Stock is then listed or (ii) authorize for quotation on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") or the
National Market System of NASDAQ all Shares of Common Stock covered by such
Shelf Registration Statement if the Common Stock is then so authorized for
quotation.
(q) use all reasonable efforts to cause the disposition of the Transfer
Restricted Securities covered by the Shelf Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to enable the seller or sellers thereof to consummate the
disposition of such Transfer Restricted Securities, subject to the proviso
contained in clause (n) above;
(r) provide a CUSIP number for all Transfer Restricted Securities not
later than the effective date of a Shelf Registration Statement covering such
Transfer Restricted Securities and provide the Trustee under the Indenture with
printed certificates for the Transfer Restricted Securities which are in a form
eligible for deposit with the Depository Trust Company;
(s) otherwise use all reasonable efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to its
security holders with regard to any applicable Registration Statement, on a
timely basis, a consolidated earnings statement meeting the requirements of Rule
158 (which need not be audited) covering a twelve-month period beginning after
the effective date of the Registration Statement (as such term is defined in
paragraph (c) of Rule 158 under the Act);
(t) cause the Indenture to be qualified under the TIA not later than the
effective date of the Shelf Registration Statement required by this Agreement
and, in connection therewith, cooperate with the Trustee and the Holders to
effect such changes to the Indenture as may be required for such Indenture to be
so qualified in accordance with the terms of the TIA; and execute and use all
reasonable efforts to cause the Trustee to execute, all documents that may be
required to effect such changes and all other forms and documents required to be
filed with the Commission to enable such Indenture to be so qualified in a
timely manner; and
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<PAGE> 11
(u) provide promptly to each Holder upon request each document filed with
the Commission pursuant to the requirements of Section 13 or Section 15(d) of
the Exchange Act.
(v) The Company may require each seller of Transfer Restricted Securities
as to which any registration is being effected to furnish to the Company such
information regarding the distribution of such Transfer Restricted Securities as
is required by law to be disclosed in the applicable Registration Statement and
the Company may exclude from such registration the Transfer Restricted
Securities of any seller who reasonably fails to furnish such information within
a reasonable time after receiving such request. Each Holder agrees, by the
acquisition of Transfer Restricted Securities, and agrees to confirm such
agreement in writing upon request of the Company, to notify the Company as
promptly as practicable of any inaccuracy or change in information previously
furnished by such Holder to the Company or of the occurrence of any event as a
result of which any Prospectus relating to such registration contains or would
contain an untrue statement of a material fact regarding such Holder or such
Holder's intended method of distribution of such Transfer Restricted Securities,
or omits to state any material fact regarding such Holder or such Holder's
intended method of distribution of such Transfer Restricted Securities,
necessary to make the statements therein, in light of the circumstances then
existing, not misleading and promptly to furnish to the Company any additional
information required to correct and update any previously furnished information
or required so that such Prospectus shall not contain, with respect to such
Holder or the distribution of such Transfer Restricted Securities, an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances then existing, not
misleading.
SECTION 6. RESTRICTIONS ON HOLDERS.
Each Holder agrees by acquisition of a Transfer Restricted Security that,
upon receipt of the notice referred to in Section 5(e)(iii) or any notice from
the Company of the existence of any fact of the kind described in Section
5(e)(iv) hereof (in each case, a "Suspension Notice"), such Holder will
forthwith discontinue disposition of Transfer Restricted Securities pursuant to
the applicable Registration Statement until (i) such Holder's has received
copies of the supplemented or amended Prospectus contemplated by Section 5(f)
hereof, or (ii) such Holder is advised in writing by the Company that the use of
the Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus (in
each case, the "Recommencement Date"). Each Holder receiving a Suspension Notice
hereby agrees that it will either (i) destroy any Prospectuses, other than
permanent file copies, then in such Holder's possession which have been replaced
by the Company with more recently dated Prospectuses or (ii) deliver to the
Company (at the Company's expense) all copies, other than permanent file copies,
then in such Holder's possession of the Prospectus covering such Transfer
Restricted Securities that was current at the time of receipt of the Suspension
Notice. The time period regarding the effectiveness of the Shelf Registration
Statement set forth in Section 3 hereof, as applicable, shall be extended by a
number of days equal to the number of days in the period from and including the
date of delivery of the Suspension Notice to the date of delivery of the
Recommencement Date.
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<PAGE> 12
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or compliance
with this Agreement will be borne by the Company, regardless of whether a Shelf
Registration Statement required by this Agreement becomes effective, including
without limitation: (i) all registration and filing fees and expenses; (ii) all
fees and expenses of compliance with federal securities and state Blue Sky or
securities laws; (iii) all expenses of printing (including printing certificates
for the Common Stock to be issued upon conversion of the Notes and printing of
Prospectuses), messenger and delivery services and telephone; (iv) all fees and
disbursements of counsel for the Company and, subject to Section 7(b) below, the
Holders of Transfer Restricted Securities; (v) all application and filing fees
in connection with listing the Common Stock on a national securities exchange or
automated quotation system pursuant to the requirements hereof; and (vi) all
fees and disbursements of independent certified public accountants of the
Company (including the expenses of any special audit and comfort letters
required by or incident to such performance).
The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Company. Notwithstanding the foregoing or anything in this Agreement to the
contrary, each Holder of the transfer Restricted Securities being registered
shall pay all commissions, placement agent fees and underwriting discounts and
commissions with respect to any Transfer Restricted Securities sold by it and
the fees and disbursements of any counsel or other advisors or experts retained
by such Holders (severally or jointly), other than counsel referred to in
Section 6(b) above.
(b) In connection with any Shelf Registration Statement required by this
Agreement, the Company will reimburse the Initial Purchasers and the Holders
selling Transfer Restricted Securities pursuant to the "Plan of Distribution"
contained in the Shelf Registration Statement, for the reasonable fees and
disbursements of not more than one counsel, who shall be Latham & Watkins,
unless another firm shall be chosen by the Holders of a majority in principal
amount (number of shares, if applicable) of the Transfer Restricted Securities
for whose benefit such Shelf Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless each Holder, its
directors, its officers and each Person, if any, who controls such Holder
(within the meaning of Section 15 of the Act and Section 20 of the Exchange
Act), from and against any and all losses, claims, damages, liabilities,
judgments, (including without limitation, any legal or other expenses incurred
in connection with investigating or defending any matter, including any action
that could give rise to any such losses, claims, damages, liabilities or
judgments) caused by any untrue statement or alleged untrue statement of a
material fact contained in any Shelf Registration Statement, preliminary
prospectus or Prospectus (or any amendment or supplement thereto) provided by
the Company to any Holder or any prospective purchaser of registered Notes or
registered shares of
11
<PAGE> 13
Common Stock or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or judgments are caused by an untrue statement or omission or
alleged untrue statement or omission that is based upon information relating to
any of the Holders furnished in writing to the Company by any of the Holders;
provided that the foregoing indemnity with respect to any preliminary Prospectus
shall not inure to the benefit of any Indemnified Person from whom the person
asserting such losses, claims, damages, liabilities and judgments purchased
securities if such untrue statement or omission or alleged untrue statement or
omission made in such preliminary Prospectus is eliminated or remedied in the
Prospectus and a copy of the Prospectus shall not have been furnished to such
person in a timely manner due to the wrongful action or wrongful inaction of
such Indemnified Person (provided that the Company has delivered the Prospectus
to such indemnified Person in requisite quantity on a timely basis to permit
such delivery or sending).
(b) Each Holder of Transfer Restricted Securities agrees, severally and
not jointly, to indemnify and hold harmless the Company and its directors and
officers, and each person, if any, who controls (within the meaning of Section
15 of the Act or Section 20 of the Exchange Act) the Company, to the same extent
as the foregoing indemnity from the Company set forth in section (a) above, but
only with reference to information relating to such Holder furnished in writing
to the Company by such Holder expressly for use in any Registration Statement.
In no event shall any Holder, its directors, its officers or any Person, if any,
who controls such Holder be liable or responsible for any amount in excess of
the amount by which the total amount received by such Holder with respect to its
sale of Transfer Restricted Securities pursuant to a Shelf Registration
Statement exceeds (i) the amount paid by such Holder for such Transfer
Restricted Securities and (ii) the amount of any damages that such Holder, its
directors, its officers or any Person, if any, who controls such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
(c) In case any action shall be commenced involving any person in respect
of which indemnity may be sought pursuant to Section 7(a) or 7(b) (the
"indemnified party"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying person") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 7(a) and 7(b), a Holder shall not be required to assume the
defense of such action pursuant to this Section 7(c), but may employ separate
counsel and participate in the defense thereof, but the fees and expenses of
such counsel, except as provided below, shall be at the expense of the Holder).
Any indemnified party shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of the indemnified party unless (i) the
employment of such counsel shall have been specifically authorized in writing by
the indemnifying party, (ii) the indemnifying party shall have failed to assume
the defense of such action or employ counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any such action (including any
impleaded parties) include both the
12
<PAGE> 14
indemnified party and the indemnifying party, and the indemnified party shall
have been advised by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all indemnified parties and all such fees and
expenses shall be reimbursed as they are incurred. Such firm shall be designated
in writing by a majority of the Holders, in the case of the parties indemnified
pursuant to Section 8(a), and by the Company, in the case of parties indemnified
pursuant to Section 8(b). The indemnifying party shall indemnify and hold
harmless the indemnified party from and against any and all losses, claims,
damages, liabilities and judgments by reason of any settlement of any action (i)
effected with its written consent or (ii) effected without its written consent
if the settlement is entered into more than forty-five business days after the
indemnifying party shall have received a request from the indemnified party for
reimbursement for the fees and expenses of counsel (in any case where such fees
and expenses are at the expense of the indemnifying party) and, prior to the
date of such settlement, the indemnifying party shall have failed to comply with
such reimbursement request and such indemnifying party shall have received
notice of the terms of the settlement at least 30 days prior to such settlement
being entered into, provided, no indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement or compromise
of, or consent to the entry of judgment with respect to, any pending or
threatened action in respect of which the indemnified party is or could have
been a party and indemnity or contribution may be or could have been sought
hereunder by the indemnified party, unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability on claims that are or could have been the subject matter of such
action and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of the indemnified party.
(d) To the extent that the indemnification provided for in this Section 8
is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, on the one
hand, and the Holders, on the other hand, from their sale of Transfer Restricted
Securities or (ii) if the allocation provided by clause 8(d)(i) is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 8(d)(i) above but also the relative
fault of the Company on the one hand, and of the Holders, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative fault of the Company, on the one hand,
and of the Holders, on the other hand, shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company, on the one hand, or by the Holders, on the
other hand, and the parties' relative intent, knowledge, access to information
and opportunity to
13
<PAGE> 15
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages, liabilities and judgments
referred to above shall be deemed to include, subject to the limitations set
forth in the second paragraph of Section 7(a), any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim.
The Company and each Holder agree that it would not be just and equitable
if contribution pursuant to this Section 8(d) were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities or judgments referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any matter, including any action
that could have given rise to such losses, claims, damages, liabilities or
judgments. Notwithstanding the provisions of this Section 8, no Holder or its
related Indemnified Holders shall be required to contribute, in the aggregate,
any amount in excess of the amount by which the total received by such Holder
with respect to the sale of its Transfer Restricted Securities pursuant to a
Registration Statement exceeds (i) the amount paid by such Holder for such
Transfer Restricted Securities and (ii) the amount of any damages which such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 8(d) are several in proportion to the respective principal amount of
Transfer Restricted Securities held by each of the Holders hereunder and not
joint.
SECTION 9. RULE 144A AND RULE 144
The Company agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Company (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make
available, upon request of any Holder of Transfer Restricted Securities, to any
Holder or beneficial owner of Transfer Restricted Securities in connection with
any sale thereof and any prospective purchaser of Transfer Restricted Securities
designated by such Holder or beneficial owner, the information required by Rule
144(d)(4) under the Act in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15(d) of
the Exchange Act, to make all filings required thereby in a timely manner in
order to permit resales of such Transfer Restricted Securities pursuant to Rule
144.
SECTION 10. UNDERWRITTEN REGISTRATIONS
(a) If any of the Transfer Restricted Securities covered by any Shelf
Registration Statement are to be sold in an underwritten offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a
14
<PAGE> 16
majority in amount of such Transfer Restricted Securities (determined on a fully
converted basis) included in such offering, subject to the consent of the
Company (which will not be unreasonably withheld or delayed).
No Holder of Transfer Restricted Securities may participate in any
underwritten registration hereunder unless such Holder (i) agrees to sell its
Transfer Restricted Securities on the basis reasonably provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
(b) Each Holder of Transfer Restricted Securities agrees, if requested
(pursuant to a timely written notice) by the managing underwriters in an
underwritten offering made pursuant to a Shelf Registration Statement, not to
effect any private sale or distribution (including a sale pursuant to Rule
144(k) and Rule 144A, but excluding non-public sales to any of its affiliates,
officers, directors, employees and controlling persons) of any of the Notes, in
the case of an underwritten offering of the Notes, or the Common Stock, in the
case of an underwritten offering of shares of Common Stock constituting Transfer
Restricted Securities, during the period beginning 10 days prior to, and ending
90 days after, the closing date of such underwritten offering.
The foregoing provisions of Section 10(b) shall not apply to any Holder of
Transfer Restricted Securities if such Holder is prevented by applicable statute
or regulation from entering into any such agreement.
(c) If any of the Transfer Restricted Securities covered by any Shelf
Registration are to be sold in an underwritten offering, the underwriters, their
controlling persons and their respective officers, directors, and employees
shall be entitled to indemnity (substantially similar to the indemnity set forth
in Section 8 of the Agreement) from the Company and the Holders, which indemnity
may be set forth in an underwriting agreement.
SECTION 11. MISCELLANEOUS
(a) Remedies. The Company acknowledges and agrees that any failure by the
Company to comply with its obligations under Section 3 hereof may result in
material irreparable injury to the Initial Purchasers or the Holders for which
there is no adequate remedy at law, that it will not be possible to measure
damages for such injuries precisely and that, in the event of any such failure,
the Initial Purchasers or any Holder may obtain such relief as may be required
to specifically enforce the Company's obligations under Section 3 hereof. The
Company further agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not, on or after the date
of this Agreement, enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The Company has not previously
entered into any agreement (which has not expired or been
15
<PAGE> 17
terminated) granting any registration rights with respect to its securities,
except with respect to the Senior Discount Notes, to any Person. The rights
granted to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's securities
under any agreement in effect on the date hereof.
(c) No Piggybacks on Shelf Registration Statement. The Company shall not
grant to any of its security holders (other than the holders of Transfer
Restricted Securities in such capacity) the right to include any of its
securities in any Shelf Registration Statement provided for in this Agreement
other than the Transfer Restricted Securities.
(d) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 4
hereof and this Section 11(d)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities (determined on a
fully converted basis) and (ii) in the case of all other provisions hereof, the
Company has obtained the written consent of Holders of a majority of the
outstanding principal amount (and shares, if applicable) of Transfer Restricted
Securities (determined on a fully converted basis and excluding Transfer
Restricted Securities held by the Company or its Affiliates).
(e) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right to
enforce such agreements directly to the extent they may deem such enforcement
necessary or advisable to protect its rights or the rights of Holders hereunder.
(f) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Company:
Cellular Communications International, Inc.
110 East 59th Street
New York, NY 10022
Telecopier No.: (212) 906-8497
Attention: Chief Financial Officer
With a copy to:
16
<PAGE> 18
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Telecopier No.: (212) 735-2000
Attention: Thomas Kennedy, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(g) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders of Transfer Restricted Securities; provided, that nothing herein shall
be deemed to permit any assignment, transfer or other disposition of Transfer
Restricted Securities in violation of the terms hereof or of the Purchase
Agreement or the Indenture. If any transferee of any Holder shall acquire
Transfer Restricted Securities in any manner, whether by operation of law or
otherwise, such Transfer Restricted Securities shall be held subject to all of
the terms of this Agreement, and by taking and holding such Transfer Restricted
Securities such Person shall be conclusively deemed to have agreed to be bound
by and to perform all of the terms and provisions of this Agreement, including
the restrictions on resale set forth in this Agreement and, if applicable, the
Purchase Agreement, and such Person shall be entitled to receive the benefits
hereof.
(h) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(i) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(j) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(k) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
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<PAGE> 19
(l) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
18
<PAGE> 20
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
CELLULAR COMMUNICATIONS INTERNATIONAL, INC.
By:/s/ Richard J. Lubasch
-------------------------
Name: RICHARD J. LUBASCH
Title: SENIOR VICE PRESIDENT
<PAGE> 21
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
By: /s/ Curtis Dickinson
------------------------
Name: CURTIS DICKINSON
Title: VICE PRESIDENT
WASSERSTEIN PERELLA SECURITIES, INC.
By:
------------------------
Name:
Title:
<PAGE> 22
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
By:
------------------------
Name:
Title:
WASSERSTEIN PERELLA SECURITIES, INC.
By: /s/ James C. Kingsbery
------------------------
Name: JAMES C. KINGSBERY
Title: VICE PRESIDENT
<PAGE> 1
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
May 12, 1998
Cellular Communications International, Inc.
110 East 59th Street
New York, NY 10022
Re: Cellular Communications International, Inc.
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as special counsel to Cellular Communications
International, Inc., a Delaware corpora tion (the "Company"), in connection with
the preparation of a registration statement on Form S-3 (File No. 333- 50169)
(the "Registration Statement") relating to the registration for resale of up to
$86,250,000 aggregate principal amount of the Company's 6% Convertible Subordi
nated Notes Due 2005 (the "Convertible Notes") issued under an indenture, dated
as of March 18, 1998 (the "Indenture"), by and among the Company and The Chase
Manhattan Bank, as trustee (the "Trustee") and the shares of the Company's
common stock, par value $0.01 per share (the "Common Stock" and, together with
the Convertible Notes, the "Securities"), issuable upon conversion of the
Convertible Notes, as contemplated by the Registration Rights Agreement, dated
March 18, 1998 (the "Registration Rights Agreement"), by and among the Company,
Donaldson, Lufkin & Jenrette Securities Corporation and Wasserstein Perella
Securities, Inc.
1
<PAGE> 2
Cellular Communications International, Inc.
May 12, 1998
Page 2
This opinion is being furnished in accordance with the
requirements of Item 601(b)(5) of Regulation S-K under the Securities Act of
1933, as amended (the "Act").
In connection with this opinion, we have examined originals
or copies, certified or otherwise identified to our satisfaction, of (i) the
Company's Registration Statement as filed with the Securities and Exchange
Commission (the "Commission") on April 15, 1998 under the Act, and Amendment No.
1 thereto as filed with the Commission on May 13, 1998 (such Registration
Statement, as so amended, being hereinafter referred to as the "Registration
Statement"); (ii) an executed copy of the Indenture filed as an exhibit to the
Registration Statement; (iii) executed copies of the Convertible Notes; (iv) the
Restated Certificate of Incorporation of the Company, as amended to date; (v)
the By-Laws of the Company, as amended to date; (vi) the Form T-1 of the Trustee
filed as an exhibit to the Registration Statement; (vii) a specimen certificate
evidencing the Common Stock; (viii) the Cross-Receipt, dated March 18, 1998,
executed by Donaldson, Lufkin & Jenrette Securities Corporation, Donaldson,
Lufkin & Jenrette International, Wasserstein Perella Securities, Inc. and the
Company relating to the issuance of the Convertible Notes and the receipt of
payment therefor; (ix) certain resolutions adopted by the Board of Directors of
the Company relating to a 3-for-2 split of the Company's Common Stock; and (xi)
certain resolutions adopted by the Board of Directors of the Company relating to
the issuance of the Securities, the Indenture and related matters. We have also
examined originals or copies, certified or otherwise identified to our
satisfaction, of such records of the Company and such agreements, certificates
of public officials, certificates of officers or other representatives of the
Company and others, and such other documents, certificates and records as we
have deemed necessary or appropriate as a basis for the opinions set forth
herein.
In our examination, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified, conformed or photostatic copies and
the authenticity of the originals of such latter documents. In making our
examination of documents executed or to be executed by parties other
2
<PAGE> 3
Cellular Communications International, Inc.
May 12, 1998
Page 3
than the Company, we have assumed that such parties had or will have the power,
corporate or other, to enter into and perform all obligations thereunder and
have also assumed the due authorization by all requisite action, corporate or
other, and execution and delivery by such parties of such documents and the
validity and binding effect thereof. As to any facts material to the opinions
expressed herein which we have not independently established or verified, we
have relied upon statements and representations of officers and other
representatives of the Company and others. In rendering the opinion set forth in
paragraph 2 below, we have assumed that the certificates representing the shares
of Common Stock issued upon conversion of the Convertible Notes will conform to
the specimen certificate examined by us and will be countersigned by a duly
authorized officer of the transfer agent for the Common Stock and duly
registered by the registrar for the Common Stock in the share record books of
the Company.
Members of our firm are admitted to the bar in the State of
New York, and we do not express any opinion as to the laws of any other
jurisdiction other than the Delaware General Corporation Law.
Based upon and subject to the foregoing and the limitations,
qualifications, exceptions and assumptions set forth herein, we are of the
opinion that:
1. The Convertible Notes are valid and binding obligations of
the Company entitled to the benefits of the Indenture and enforceable
against the Company in accordance with their terms, except to the
extent that (a) enforcement thereof may be limited by (1) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (2) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity) and
(b) the waiver contained in Section 4.9 of the Indenture may be deemed
unenforceable.
2. The shares of Common Stock initially issuable upon
conversion of the Convertible Notes, if and when the Convertible
Notes are converted into shares of Common Stock in accordance with
their
3
<PAGE> 4
Cellular Communications International, Inc.
May 12, 1998
Page 4
terms and the terms of the Indenture, will be validly issued, fully
paid and nonassessable.
In rendering the opinion set forth in paragraph 1 above, we
have assumed that the execution, authentication and delivery by the Company of
the Convertible Notes did not and will not violate, conflict with or constitute
a default under (i) any agreement or instrument to which the Company or its
properties is subject (except that we do not make the assumption set forth in
this clause (i) with respect to the Company's Restated Certificate of
Incorporation, the Company's By-Laws, the Indenture, or the Registration Rights
Agreement), (ii) any law, rule, or regulation to which the Company is subject
(except that we do not make the assumption set forth in this clause (ii) with
respect to the Delaware General Corporation Law and those laws, rules and
regulations of the State of New York and the United States of America, in each
case, which, in our experience, are normally applicable to transactions of the
type contemplated hereby (other than securities laws, antifraud laws and the
rules and regulations of the National Association of Securities Dealers, Inc.),
but without our having made any special investigation with respect to any other
laws, rules or regulations), (iii) any judicial or regulatory order or decree of
any governmental authority or (iv) any consent, approval, license, authorization
or validation of, or filing, recording or registration with any governmental
authority.
We hereby consent to the filing of this opinion with the
Commission as an exhibit to the Registration Statement. We also consent to the
reference to our firm under the caption "Legal Matters" in the Registration
Statement. In giving this consent, we do not thereby admit that we are included
in the category of persons whose consent is required under Section 7 of the Act
or the rules and regulations of the Commission.
Very truly yours,
/s/ SKADDEN, ARPS, SLATE, MEAGHER &
FLOM LLP
4
<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
NEW YORK 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 PARK AVENUE
NEW YORK, NEW YORK 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
---------------------------------------------
CELLULAR COMMUNICATIONS INTERNATIONAL, INC.
(Exact name of obligor as specified in its charter)
DELAWARE 13-3221852
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
110 EAST 59TH STREET
NEW YORK, NEW YORK 10022
(Address of principal executive offices) (Zip Code)
6% Convertible Subordinated Notes Due 2005
(Title of the indenture securities)
<PAGE> 2
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
-2-
<PAGE> 3
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank).
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 20th day of April 1998.
THE CHASE MANHATTAN BANK
By /s/Andrew M. Deck
----------------------
Andrew M. Deck
Vice President
- 3 -
<PAGE> 4
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
The Chase Manhattan Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business December 31, 1997, in accordance
with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
ASSETS IN MILLIONS
<S> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ............................ $ 12,428
Interest-bearing balances .................... 3,428
Securities: .......................................
Held to maturity securities ....................... 2,561
Available for sale securities ..................... 43,058
Federal funds sold and securities purchased under
agreements to resell ......................... 29,633
Loans and lease financing receivables:
Loans and leases, net of unearned income ..... $129,260
Less: Allowance for loan and lease losses .... 2,783
Less: Allocated transfer risk reserve ........ 0
--------
Loans and leases, net of unearned income,
allowance, and reserve ....................... 126,477
Trading Assets .................................... 62,575
Premises and fixed assets (including capitalized
leases) ........................................... 2,943
Other real estate owned ........................... 295
Investments in unconsolidated subsidiaries and
associated companies ......................... 231
Customers' liability to this bank on acceptances
outstanding .................................. 1,698
Intangible assets ................................. 1,466
Other assets ...................................... 10,268
--------
TOTAL ASSETS ...................................... $297,061
========
</TABLE>
- 4 -
<PAGE> 5
<TABLE>
<CAPTION>
LIABILITIES
<S> <C> <C>
Deposits
In domestic offices .............................................................. $94,524
Noninterest-bearing .............................................................. $ 39,487
Interest-bearing ................................................................. 55,037
--------
In foreign offices, Edge and Agreement, subsidiaries and IBF's ................... 71,162
Noninterest-bearing .............................................................. $ 3,205
Interest-bearing ................................................................. 67,957
Federal funds purchased and securities sold under agreements to repurchase ............ 43,181
Demand notes issued to the U.S. Treasury .............................................. 1,000
Trading liabilities ................................................................... 48,903
Otherborrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
With a remaining maturity of one year or less .................................... 3,599
With a remaining maturity of more than one year
through three years ....................................................... 253
With a remaining maturity of more than three years ............................... 132
Bank's liability on acceptances executed and outstanding .............................. 1,698
Subordinated notes and debentures ..................................................... 5,715
Other liabilities ..................................................................... 9,896
TOTAL LIABILITIES ..................................................................... 280,063
--------
EQUITY CAPITAL
Perpetual preferred stock and related surplus ......................................... 0
Common stock .......................................................................... 1,211
Surplus (exclude all surplus related to preferred stock) ............................. 10,291
Undivided profits and capital reserves ................................................ 5,502
Net unrealized holding gains (losses) on available-for-sale securities ................ (22)
Cumulative foreign currency translation adjustments ................................... 16
TOTAL EQUITY CAPITAL .................................................................. 16,998
--------
TOTAL LIABILITIES AND EQUITY CAPITAL .................................................. $297,061
========
</TABLE>
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
THOMAS G. LABRECQUE ) DIRECTORS
WILLIAM B. HARRISON, JR. )
-5-
