Filed Pursuant to Rule 424(b)(3)
Registration No. 333-58128
PROSPECTUS
[LOGO OF SBA COMMUNICATIONS]
SBA Communications Corporation
Exchange Offer for $500,000,000 10 1/4% Senior Notes due 2009
Exchange Offer
We will exchange new notes that are registered under the Securities Act for
old notes that were sold on February 2, 2001. All old notes that are validly
tendered and not validly withdrawn will be exchanged. We will receive no
proceeds from the exchange offer.
Exchange Offer Expiration
The exchange offer will expire on the earlier of 5:00 p.m., New York City
time on Monday, May 14, 2001 or the date when all old notes have been tendered,
or a later date and time to which it may be extended.
Old Notes
On February 2, 2001, we issued and sold $500,000,000 of 10 1/4% Senior Notes
due 2009. If you tender your old notes in the exchange offer, interest will
cease to accrue before your new notes are issued. If you do not tender in the
exchange offer, your old notes will continue to be subject to the same terms
and restrictions except that we will not be required to register your old notes
under the Securities Act.
New Notes
Identical to the old notes except that the new notes will be registered
under the Securities Act.
. Maturity: February 1, 2009.
. Change of Control: You can require us to purchase all or part of your
notes at 101% of the aggregate principal amount plus accrued and unpaid
interest, if any, to the date of purchase.
. Interest: Paid semi-annually on February 1 and August 1 of each year,
commencing on August 1, 2001.
. Redemption by us: We may redeem all or part of the notes on or after
February 1, 2005. Prior to February 1, 2004, we may redeem up to 35% of
the notes from the proceeds of certain sales of our equity securities.
Redemption prices are specified in this prospectus under "Description
of the Notes--Optional Redemption."
. Ranking: The notes will be senior unsecured obligations of SBA
Communications Corporation and will not be guaranteed by any of our
subsidiaries. The notes will rank pari passu with our currently
existing 12% senior discount notes and will be structurally subordinate
to our subsidiaries' indebtedness, including any senior credit
facility.
Investment in the notes to be issued in the exchange offer involves risks.
See the risk factors section beginning on page 13.
This prospectus and the accompanying letter of transmittal are first being
mailed to holders of outstanding notes on or about April 16, 2001.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the notes or passed upon the adequacy
or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is April 16, 2001.
TABLE OF CONTENTS
Page
----
Information Incorporated by Reference...................................... ii
Summary.................................................................... 1
Risk Factors............................................................... 13
Special Note Regarding Forward-Looking Statements.......................... 23
Use of Proceeds............................................................ 24
Capitalization............................................................. 25
Selected Historical Financial Information.................................. 26
Description of Other Indebtedness.......................................... 28
The Exchange Offer......................................................... 29
Description of the Notes................................................... 39
Certain U.S. Federal Income Tax Considerations............................. 74
Plan of Distribution....................................................... 78
Legal Matters.............................................................. 78
Experts.................................................................... 78
Where You Can Find More Information........................................ 78
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INFORMATION INCORPORATED BY REFERENCE
The Commission allows us to provide information about our business and other
important information to you by "incorporating by reference" the information we
file with the Commission, which means that we can disclose the information to
you by referring in this prospectus to the documents we file with the
Commission. Under the Commission's regulations, any statement contained in a
document incorporated by reference in this prospectus is automatically updated
and superseded by any information contained in this prospectus, or in any
subsequently filed document of the types described below.
We incorporate into this prospectus by reference the following documents
filed by us with the Commission, each of which should be considered an
important part of this prospectus:
Commission Filing (File No. 000-
30110) Period Covered or Date of Filing
-------------------------------- --------------------------------
Annual Report on Form 10-K........... Year ended December 31, 2000
Current Reports on Form 8-K.......... January 22, 2001 and February 1, 2001
All subsequent documents filed by us
under Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act of 1934... After the date of this prospectus and
before the termination of the exchange
offer
You may request a copy of each of our filings at no cost, by writing or
telephoning us at the following address, telephone or facsimile number:
SBA Communications Corporation
One Town Center Road, Third Floor
Boca Raton, FL 33486
Phone: (561) 995-7670
Fax: (561) 998-3448
Exhibits to a document will not be provided unless they are specifically
incorporated by reference in that document.
You must request the filings no later than five business days before the
date you must make your investment decision in order for you to obtain timely
delivery of this information.
The information in this prospectus may not contain all of the information
that may be important to you. You should read the entire prospectus, as well as
the documents incorporated by reference in the prospectus, before making an
investment decision.
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SUMMARY
This summary highlights selected information about us. In addition to
reading this summary, you should carefully review the entire prospectus,
especially the "Risk Factors" section of this document beginning on page 13.
Unless the context otherwise requires, in this prospectus, the terms "SBA,"
"we," "us" and "our" refer to SBA Communications Corporation and its
subsidiaries.
SBA Communications Corporation
We are a leading independent owner and operator of wireless communications
towers in the United States. We generate revenues from our two primary
businesses, site leasing and site development. In our site leasing business, we
lease antenna space on towers and other structures that we own or manage for
others. The towers that we own have either been built by us at the request of a
wireless carrier or built or acquired based on our own initiative. At December
31, 2000, we owned or controlled 2,390 towers and had agreements to acquire 677
towers. We also had carrier directives to build over 600 additional towers and
had, in various phases of development, over 1,000 locations which we had
internally identified as a desirable location on which to build a tower. In our
site development business, we offer wireless service providers assistance in
developing their own networks, including designing a network with full signal
coverage, identifying and acquiring locations to place their antennas,
obtaining zoning approvals, building towers when necessary and installing their
antennas. Since our founding in 1989, we have participated in the development
of more than 15,000 antenna sites in 49 of the 51 major wireless markets in the
United States.
Site Leasing Services
In 1997, we began aggressively expanding our site leasing business by
capitalizing on our nationally recognized site development experience and
strong relationships with wireless service providers to take advantage of the
trends toward co-location, which is the placement of multiple antennas on one
tower, and independent tower ownership. Our 2,390 towers at December 31, 2000
had 5,548 total tenants or 2.3 tenants per tower. We believe our towers have
significant capacity to accommodate additional tenants. The following chart
shows the number of towers we constructed for our own account and the number of
towers we acquired during the periods indicated:
Year Ended December
31,
-------------------
1997 1998 1999 2000 Total
---- ---- ---- ---- -----
Towers constructed................................. 15 310 438 779 1,542
Towers acquired.................................... 36 133 231 448 848
We believe our history and experience in providing site development services
gives us a competitive advantage in choosing the most attractive locations on
which to build new towers or buy existing towers, as measured by our success in
increasing tower revenues and cash flows. Our same tower revenue growth at
December 31, 2000 on the 1,163 towers we owned as of December 31, 1999 was 34%,
based on tenant leases signed and revenues annualized as of December 31, 1999
and 2000. We signed 261 new tenant leases in the quarter ended December 31,
2000 on the 1,950 towers we owned at the beginning of the quarter, at an
average initial monthly rent of $1,567. Our annualized rate of tenants added
per tower, on a broadband equivalent basis, was .55, .64, .59 and .56 for each
of the last four quarters. A broadband equivalent basis is calculated by
dividing total lease revenue by $1,500, an industry benchmark for monthly tower
rent per tenant. We believe that our annualized rate of new tenants added per
tower per quarter is among the highest in the industry.
Our site leasing revenue comes from a variety of wireless carriers,
including AT&T Wireless, Cingular, Nextel, Sprint PCS, Verizon and VoiceStream.
Site leasing revenue was $26.4 million for the year ended
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December 31, 1999 and $52.0 million for the year ended December 31, 2000. We
believe that our site leasing revenues will grow as wireless service providers
continue to lease antenna space on our towers and as the number of towers we
own or control grows.
Our primary focus is the leasing of antenna space on our multi-tenant towers
to a variety of wireless service providers under long-term lease contracts. We
lease antenna space on:
. the towers we construct through carrier directives under build-to-suit
programs;
. existing towers we acquire;
. the towers we build on locations we have selected which we call
"strategic" new tower builds; and
. towers we lease, sublease and/or manage for third parties.
Under a build-to-suit program, we build a tower for a wireless service
provider on a location of their direction. We retain ownership of the tower and
the exclusive right to co-locate additional tenants on the tower. Many wireless
service providers are choosing the build-to-suit option as an alternative to
tower ownership, and we believe that this outsourcing trend is likely to
continue for the foreseeable future. Our build-to-suit sites come from a
variety of wireless carriers, including Alamosa PCS, AT&T Wireless, Cingular,
Georgia PCS, Horizon PCS, Sprint PCS, TeleCorp PCS and VoiceStream.
To help maximize the revenue and profit we earn from our capital investment
in the towers we own, we have begun to provide services at our tower locations
beyond the leasing of antenna space. These services which we provide or may
provide in the future include generator provisioning, power provisioning,
antenna installation, equipment installation and backhaul, which is the
transport of the wireless signals transmitted or received by an antenna to a
carrier's network. Some of these services are recurring in nature, and are
contracted for by a wireless carrier or other user in a manner similar to the
way they lease antenna space.
Site Development Services
Our site development business consists of two segments, site development
consulting and site development construction, through which we provide wireless
service providers a full range of end-to-end services. In the consulting
segment of our site development business, we offer clients the following
services: (1) network pre-design; (2) identification of potential locations for
towers and antennas; (3) support in buying or leasing of the location; and (4)
assistance in obtaining zoning approvals and permits. In the construction
segment of our site development business we provide a number of services,
including the following: (1) tower and related site construction; (2) switch
construction; (3) antenna installation; and (4) radio equipment installation,
optimization and service. We will continue to use our site development
expertise to complement our site leasing business and secure additional new
tower build opportunities. We have capitalized on our leadership position in
the site development business and our strong relationships with wireless
service providers to develop our build-to-suit and strategic new tower build
programs. For our strategic new tower build activities, we are often able to
use our site development activities to identify an area without wireless signal
coverage on which to build a tower for the benefit of a current or potential
customer.
We have a diverse range of customers, including cellular, PCS, wireless data
and Internet services, paging, SMR and ESMR providers as well as other users of
wireless transmission and reception equipment. Our site development customers
currently comprise many of the major wireless communications companies,
including AT&T Wireless, Cingular, Nextel, Sprint PCS, Verizon and VoiceStream.
Site development revenue was $60.6 million for the year ended December 31, 1999
and $115.9 million for the year ended December 31, 2000. We believe that our
site development business will grow with the expected overall growth of
wireless and other telecommunications networks. We anticipate that site
development construction revenues will continue to exceed site development
consulting revenues.
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Industry Overview
We believe that the rapid growth in demand for wireless services will
continue to increase the need for communication sites (which include towers,
rooftops and other structures on which antennas are placed). The growth in
demand for wireless services and communication sites is the result of several
factors, including:
. the emergence of new wireless technologies, such as wireless data,
Internet services and improved, or "next generation" wireless voice
transmission;
. business and consumer preferences for higher quality voice and data
transmission and the popularity of the "one-rate" plans;
. the need to expand services and fill-in and upgrade existing networks;
. the continuing build-out of higher frequency technologies, such as PCS,
which have a reduced cell range and thus require a more dense network of
towers;
. the continuing issuance of new wireless network licenses requiring the
construction of new wireless networks; and
. increasing mobility of the U.S. population and the growing awareness of
the benefits of mobile communications.
In addition, our site leasing business benefits from the industry's
diversified recurring revenue and effective operating leverage as a result of
several factors, including:
. the long-term nature of lease contract revenues;
. low customer turnover rates due to the high direct and indirect costs of
relocation;
. low variable operating costs, which cause increases in revenues to
generate disproportionately larger increases in tower cash flow;
. low on-going maintenance capital expenditure requirements;
. a customer base diversified across geographic markets, industry segments
(PCS, wireless data and Internet, cellular, paging, ESMR and SMR) and
individual customers within these segments; and
. the limited number of available tower sites serving a given area and
consequent barriers to entry, principally as a result of local
opposition to the proliferation of towers within an area.
We believe that wireless service providers face greater competition today
and are now focusing their capital and operations primarily on activities that
build subscriber growth, such as marketing and distribution. Therefore, they
will increasingly seek to outsource communication site ownership, construction,
management and maintenance.
Business Strategy
Our primary strategy is to expand the scope of our position as a leading
owner and operator of communication towers and provider of site development
services. Key elements of our strategy include:
. Maximizing use of tower capacity
. Developing new towers that we will own and operate
. Acquiring existing towers
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. Capturing other revenues that flow from our tower ownership
. Executing on a local basis
. Building on strong relationships with major wireless service providers
. Maintaining our expertise in site development services
. Capitalizing on our management experience
Recent Events
In September 2000, we entered into an agreement to acquire 275 existing
towers from TeleCorp PCS, Inc. in Illinois, Louisiana, Tennessee, Texas,
Mississippi, Missouri, Arkansas and Puerto Rico. The acquisition price of the
towers will be $327,500 per tower. Contingent on the closing of the TeleCorp
tower acquisition, we have agreed to become the exclusive build-to-suit
provider for TeleCorp. Under the build-to-suit agreement, we will construct a
minimum of 200 tower facilities and up to a maximum of 400 tower facilities.
Under the terms of the acquisition, TeleCorp will enter into long-term leases,
at a monthly rate of $1,200 per acquired tower and $1,300 per built tower, to
place its wireless network equipment on each tower acquired or built. On March
16, 2001 we acquired 203 of the 275 towers from Telecorp for $66.5 million. We
anticipate completing the acquisition of the remaining 72 towers in the second
quarter of 2001. However, our acquisition of the remaining towers is subject to
our satisfactory completion of our review of the business, financial and legal
aspects of towers that may be acquired. As of December 31, 2000, the 275 towers
which would be purchased if the TeleCorp transaction was consummated, had an
annualized run rate, including pending leases, of approximately $6.1 million in
revenues and approximately $3.9 million in cash flow.
In December 2000, we entered into an agreement with Louisiana Unwired Inc.,
a subsidiary of US Unwired Inc., to acquire 300 towers in Louisiana, Texas and
Arkansas. Pursuant to the terms of the agreement, we purchased 127 of the 300
towers on December 29, 2000. We have the obligation to purchase the remaining
173 towers, subject to the receipt of certain consents, by May 1, 2001.
Additionally, the agreement granted us the option until December 31, 2001 to
purchase the lesser of (1) the number of towers constructed by Louisiana
Unwired during 2001 and (2) 100 towers. Our ability to exercise this option is
contingent upon our (A) securing financing adequate to purchase the towers and
(B) placing in escrow a deposit of $1.67 million prior to April 19, 2001. The
acquisition price for each of the towers covered by the agreement is $313,000
per tower. Under the terms of the acquisition agreement, US Unwired has agreed
to enter into long-term leases, at a monthly rate of $1,500 per tower, to place
its wireless network equipment at each tower that we purchase. As of December
31, 2000, the 300 towers, including the 173 towers which would be purchased if
the second stage of the US Unwired transaction was consummated, had an
annualized run rate, including pending leases, of approximately $5.8 million in
revenues and approximately $3.4 million in cash flow.
While all of the towers acquired from TeleCorp and US Unwired will generate
revenues immediately upon consummation of their respective acquisition, the
towers will not at such time be profitable. We cannot assure you that these
towers will ever be profitable because these towers will be profitable only if
we are able to sign additional leases with third parties for the location of
antennas on these towers.
The acquisition of the remaining 72 TeleCorp towers and the remaining 273 US
Unwired towers are subject to numerous closing conditions. We cannot assure you
if or when either of these transactions will close.
Our principal executive offices are located at One Town Center Road, Third
Floor, Boca Raton, Florida 33486, and our telephone number is (561) 995-7670.
We were founded in 1989, incorporated in Florida in 1997 and completed our
initial public offering of our Class A common stock in 1999. Our Class A common
stock is traded on the Nasdaq National Market under the symbol "SBAC."
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The Exchange Offer
Securities Offered.... $500.0 million in aggregate principal amount of 10 1/4%
senior notes due 2009. The terms of the new notes and
the old notes are identical except for the transfer and
registration rights. The new notes and the old notes
are collectively referred to as the "notes."
Issuer................ SBA Communications Corporation.
Issue Date............ February 2, 2001.
Maturity Date......... February 1, 2009.
Issuance of Old
Notes................ $500.0 million aggregate principal amount of 10 1/4%
senior notes due 2009 were issued on February 2, 2001
to Lehman Brothers Inc., Salomon Smith Barney Inc.,
Deutsche Banc Alex. Brown, Inc., Credit Suisse First
Boston Corporation through its affiliate Donaldson,
Lufkin & Jenrette Securities Corporation, TD Securities
(USA) Inc., Barclays Capital Inc. and Wachovia
Securities, Inc., which placed the old notes with
qualified institutional buyers in reliance on Rule 144A
and to buyers outside the United States in reliance on
Regulation S under the Securities Act.
The Exchange Offer.... We are offering to exchange $1,000 principal amount of
new notes for each $1,000 principal amount of old
notes. Old notes may only be exchanged in $1,000
principal amount increments. There is $500.0 million in
aggregate principal amount of old notes outstanding.
Conditions to the
Exchange Offer....... The exchange offer is not conditioned upon any minimum
principal amount of old notes being tendered for
exchange. However, the exchange offer is subject to
customary conditions, which may be waived by us. See
"The Exchange Offer--Conditions to the Exchange Offer."
Procedures For
Tendering............ If you wish to tender your old notes in the exchange
offer, you must complete and sign the letter of
transmittal for the notes according to the instructions
contained in this prospectus. You must then mail, fax
or hand deliver the letter of transmittal, together
with any other required documents, to the exchange
agent, either with the old notes to be tendered or in
compliance with the specified procedures for guaranteed
delivery of old notes. You should allow sufficient time
to ensure timely delivery. Some brokers, dealers,
commercial banks, trust companies and other nominees
may also effect tenders by book-entry transfer. If you
own old notes registered in the name of a broker,
dealer, commercial bank, trust company or other
nominee, you are urged to contact that person promptly
if you wish to tender old notes in the exchange offer.
Letters of transmittal and certificates representing
the old notes should not be sent to SBA. These
documents should be sent only to the exchange agent.
Questions regarding how to tender and requests for
information should also be directed to the exchange
agent. If you hold old notes through The Depository
Trust Company and wish to accept the exchange offer,
you must do so pursuant to the book-entry transfer
facility's procedures for book entry transfer (or other
applicable procedures), contained in this prospectus
and the letter of
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transmittal. See "The Exchange Offer--Procedures for
Tendering Old Notes."
Expiration Date;
Withdrawal........... The exchange offer will expire on the earlier of 5:00
p.m., New York City time on Monday, May 14, 2001 or the
date when all old notes have been tendered, or a later
date and time to which it may be extended. However, it
may not be extended beyond August 1, 2001. We will
accept for exchange any and all old notes that are
validly tendered in the exchange offer prior to 5:00
p.m., New York City time, on the expiration date. The
tender of old notes may be withdrawn at any time prior
to the earlier of the expiration date or the date when
all old notes have been tendered. Any old note not
accepted for exchange for any reason will be returned
without expense to the tendering holder as promptly as
practicable after the expiration or termination of the
exchange offer. The new notes issued in the exchange
offer will be delivered promptly following the
expiration date. See "The Exchange Offer--Terms of the
Exchange Offer; Period for Tendering Old Notes" and "--
Withdrawals of Tenders."
Guaranteed Delivery
Procedures........... If you wish to tender your old notes and (1) your old
notes are not immediately available or (2) you cannot
deliver your old notes together with the letter of
transmittal to the exchange agent prior to the
expiration date, you may tender your old notes
according to the guaranteed delivery procedures
contained in the letter of transmittal. See "The
Exchange Offer--Procedures for Tendering Old Notes--
Guaranteed Delivery Procedures."
Tax Considerations.... For U.S. federal income tax purposes, the exchange of
old notes for new notes should not be considered a sale
or exchange or otherwise a taxable event to the holders
of notes.
Use of Proceeds....... We will receive no proceeds from the exchange offer.
Appraisal Rights...... Holders of old notes will not have dissenters' rights
or appraisal rights in connection with the exchange
offer.
Exchange Agent........ State Street Bank and Trust Company is serving as
exchange agent in connection with the exchange offer
for the notes.
Resales of New
Notes................ Based on an interpretation by the Commission set forth
in no-action letters issued to third parties, we
believe that you may resell or otherwise transfer new
notes issued in the exchange offer in exchange for old
notes without restrictions under the federal securities
laws. However, there are exceptions to this general
statement.
You may not freely transfer the new notes if:
. you are an affiliate of SBA;
. you did not acquire the new notes in the ordinary
course of your business;
. you intend to participate in the exchange offer for
the purpose of distributing new notes; or
. you are a broker-dealer who acquired the old notes
directly from us.
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Any holder subject to any of the exceptions above will
not be able to rely on the interpretations of the Staff
set forth in the above-mentioned interpretive letters;
will not be permitted or entitled to tender old notes
in the exchange offer; and must comply with the
registration and prospectus delivery requirements of
the Securities Act in connection with any sale or other
transfer of old notes unless the sale is made pursuant
to an exemption from those requirements.
In addition, each participating broker-dealer that
receives new notes for its own account in the exchange
offer in exchange for old notes that were acquired as a
result of market making activities or other trading
activities, and not directly from us, must comply with
the registration and prospectus delivery requirements
of the Securities Act in connection with the resale of
the new notes.
Consequences of Not
Exchanging The Old
Notes................ If you do not tender your old notes or your old notes
are not properly tendered, the existing transfer
restrictions will continue to apply. The old notes are
currently eligible for sale pursuant to Rule 144A
through the Portal Market. Because we anticipate that
most holders will elect to exchange old notes for new
notes due to the absence of restrictions on the resale
of new notes under the Securities Act, we anticipate
that the liquidity of the market for any old notes
remaining after the consummation of the exchange offer
will be substantially limited. See "Risk Factors--There
could be negative consequences to you if you do not
exchange your old notes for new notes" and "The
Exchange Offer--Consequences of Failure to Exchange Old
Notes."
No Prior Market....... The notes will be new securities for which there is
currently no market. Although the initial purchasers
have informed us of their intentions to make a market
in the notes, they are not obligated to do so and they
may discontinue any market-making at any time without
notice. Accordingly we cannot assure you as to the
development or liquidity of any market for the notes.
Summary Description of the New Notes
The terms of the new notes and the old notes are identical in all respects,
except that the terms of the new notes do not include the transfer restrictions
and registration rights relating to the old notes.
Notes Offered......... $500.0 million aggregate principal amount of 10 1/4%
senior notes due 2009.
Maturity Date......... February 1, 2009.
Interest Payment
Dates................ February 1 and August 1 of each year, commencing August
1, 2001.
Interest.............. The new notes will bear interest from the later of
February 2, 2001 or the most recent date to which
interest has been paid on the old notes. Accordingly,
registered holders of new notes on the relevant record
date for the first interest payment date following the
completion of the exchange offer will receive interest
accruing from the later of February 2, 2001 or the
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most recent date on which interest has been paid. Old
notes accepted for exchange will cease to accrue
interest from and after the date of completion of the
exchange offer. Holders of old notes whose old notes
are accepted for exchange will not receive any payment
in respect of interest on the old notes otherwise
payable on any interest payment date that occurs on or
after completion of the exchange offer.
Interest Ranking...... The notes will be the issuer's general unsecured senior
indebtedness and will be pari passu in right of payment
to the issuer's other existing and future senior
indebtedness.
As of December 31, 2000, on a pro forma basis after
giving effect to the completion of the offering of the
old notes, we (exclusive of our subsidiaries) would
have had $709.0 million of indebtedness outstanding.
Because we are a holding company and conduct our
business through our subsidiaries, all existing and
future indebtedness and other liabilities and
commitments of our subsidiaries, including any senior
credit facility and trade payables, will be
structurally senior to the notes.
Optional Redemption... We may redeem all or a part of the notes on or after
February 1, 2005, at the redemption prices listed in
"Description of the Notes--Optional Redemption" plus
accrued and unpaid interest to the redemption date.
Prior to February 1, 2004, we may use the proceeds of
certain equity offerings and/or equity investments to
redeem up to 35% of the original principal amount of
the notes at a redemption price of 110.250% of their
principal amount, plus accrued and unpaid interest and
liquidated damages, if any, to the redemption date;
provided that at least 65% of the aggregate principal
amount of the notes remain outstanding after such
redemption and that such redemption shall occur within
60 days of the date of the closing of such equity
offering and/or equity investment.
Mandatory Offer to
Purchase............. If we experience a change of control, holders of the
notes may require us to repurchase all or a part of
their notes at a purchase price of 101% of the
principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase.
Covenants............. The notes are issued under an indenture between us and
the trustee. The indenture contains covenants that
limit our ability to, among other things:
. incur additional indebtedness and issue preferred
stock;
. pay dividends or make other distributions;
. make other restricted payments and investments;
. create liens;
. permit restrictions on the ability of our
subsidiaries to pay dividends or other payments to
us;
. sell assets;
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. merge or consolidate with other entities;
. enter into sale and leaseback transactions; and
. enter into transactions with affiliates.
Events of Default..... Each of the following constitutes an event of default:
. default for 30 days in the payment when due of
interest on the notes;
. default in payment when due of the principal of or
premium, if any, on the notes;
. failure by us or any of our subsidiaries to comply
with the provisions described under the caption "--
Certain Covenants--Merger, Consolidation or Sale of
Assets" or failure by us to consummate a Change of
Control Offer or Asset Sale Offer (as defined in the
indenture) under the provisions of the indenture;
. failure by us or any of our subsidiaries for 30 days
after notice to comply with any of our other
agreements in the indenture or the notes;
. 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 us or any of our significant
subsidiaries (or the payment of which is guaranteed
by us or any of our significant subsidiaries)
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 (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 $10.0 million or more;
. failure by us or any of our significant subsidiaries
to pay final judgments aggregating in excess of
$10.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days; or
. certain events of bankruptcy or insolvency with
respect to us or any of our restricted subsidiaries
that is a significant subsidiary.
Rights of Holders..... If any event of default occurs and is continuing, the
trustee or the holders of at least 25% in principal
amount of the then outstanding notes may declare all of
the notes to be due and payable immediately. Upon any
such declaration, the principal of, and accrued and
unpaid interest, if any, on the notes shall become due
and payable immediately. Notwithstanding the foregoing,
in the case of an event of default arising from certain
events of bankruptcy or insolvency, with respect to us,
all outstanding notes will become due and payable
without further action or notice. Holders of the notes
may not enforce the indenture or the notes except as
provided in the
9
indenture. Subject to certain limitations, holders of a
majority in principal amount of the then outstanding
notes may direct the trustee in its exercise of any
trust or power.
The holders of a majority in aggregate principal amount
of the notes then outstanding by notice to the trustee
may on behalf of the holders of all of the notes waive
any existing default or event of default and its
consequences under the indenture except a continuing
default or event of default in the payment of interest
on, or the principal of, the notes.
Trustee............... State Street Bank and Trust Company
For additional information concerning the notes, see "Description of the
Notes."
10
SUMMARY HISTORICAL FINANCIAL DATA
The following table sets forth summary historical financial data as of and
for the years ended December 31, 1998, 1999 and 2000. The financial data for
each of the full fiscal years have been derived from, and are qualified by
reference to, our audited financial statements, which Arthur Andersen LLP, our
independent certified public accountants, have audited. You should read the
information set forth below in conjunction with the Consolidated Financial
Statements and their related notes incorporated by reference into this
prospectus.
Year Ended December 31,
-------------------------------
1998 1999 2000
--------- --------- ---------
(dollars in thousands)
Operating Data:
Revenues:
Site development........................... $ 46,705 $ 60,570 $ 115,892
Site leasing............................... 12,396 26,423 52,014
--------- --------- ---------
Total revenues........................... 59,101 86,993 167,906
--------- --------- ---------
Cost of revenues (exclusive of depreciation
shown below):
Cost of site development................... 36,500 45,804 88,892
Cost of site leasing....................... 7,281 12,134 19,502
--------- --------- ---------
Total cost of revenues................... 43,781 57,938 108,394
--------- --------- ---------
Gross profit................................. 15,320 29,055 59,512
Selling, general and administrative(a)....... 18,302 19,784 27,799
Depreciation and amortization................ 5,802 16,557 34,831
--------- --------- ---------
Operating loss............................... (8,784) (7,286) (3,118)
Interest and other expense, net.............. (12,641) (26,378) (24,564)
(Provision) benefit for income taxes......... 1,524 223 (1,233)
Extraordinary item........................... -- (1,150) --
--------- --------- ---------
Net loss..................................... (19,901) (34,591) (28,915)
Dividends on preferred stock................. (2,575) 733 --
--------- --------- ---------
Net loss to common shareholders.............. $ (22,476) $ (33,858) $ (28,915)
========= ========= =========
Other Data:
EBITDA(b).................................... $ (2,377) $ 9,582 $ 32,026
Annualized tower cash flow(c)................ 8,088 18,692 31,056
Capital expenditures(d)...................... 138,124 226,570 494,053
Cash provided (used) by:
Operating activities....................... 7,471 23,134 47,516
Investing activities....................... (138,124) (208,870) (445,280)
Financing activities....................... 151,286 162,124 409,613
Ratio of earnings to fixed charges(e)........ -- -- 0.1x
Year Ended December 31,
-------------------------
1998 1999 2000
------- -------- --------
Tower Data:
Towers owned at the beginning of period............... 51 494 1,163
Towers constructed.................................... 310 438 779
Towers acquired....................................... 133 231 448
------ -------- --------
Total towers at the end of period..................... 494 1,163 2,390
(Footnotes on following page)
11
As of December 31,
---------------------------
1998 1999 2000
-------- -------- --------
(dollars in thousands,
except per tower data)
Balance Sheet Data:
Cash and cash equivalents.......................... $ 26,743 $ 3,131 $ 14,980
Property, plant and equipment (net)................ 150,946 338,892 765,815
Total assets....................................... 214,573 429,823 948,818
Total debt......................................... 182,573 320,767 284,273
Redeemable preferred stock......................... 33,558 -- --
Common stockholders' equity (deficit).............. $(26,095) $ 48,582 $538,160
Certain Ratios:
Net debt to annualized EBITDA(f)................... 6.5x
Net debt per tower................................. $112,675
--------
(a) For the year ended December 31, 1998, selling, general and administrative
expenses included non-cash compensation expense of $0.6 million incurred in
connection with the issuance of stock options and Class A common stock. For
the year ended December 31, 1999, selling, general and administrative
expenses included non-cash compensation expense of $0.3 million incurred in
connection with stock option activity. For the year ended December 31,
2000, selling, general and administrative expenses included non-cash
compensation expense of $0.3 million incurred in connection with stock
option and restricted stock activity.
(b) EBITDA represents earnings (loss) before interest income, interest expense,
other income, income taxes, depreciation, amortization and the non-cash
compensation expense referred to in footnote (a) above. EBITDA is commonly
used in the telecommunications industry to analyze companies on the basis
of operating performance, leverage and liquidity. EBITDA is not intended to
represent cash flows for the periods presented, nor has it been presented
as an alternative to operating income or as an indicator of operating
performance and should not be considered in isolation or as a substitute
for measures of performance prepared in accordance with generally accepted
accounting principles. Companies calculate EBITDA differently and,
therefore, EBITDA as presented by us may not be comparable to EBITDA
reported by other companies.
(c) We define "tower cash flow" as site leasing revenue less cost of site
leasing revenue (exclusive of depreciation). Tower cash flow includes
deferred revenue attributable to certain leases. We believe tower cash flow
is useful because it allows you to compare tower performance before the
effect of expenses (selling, general and administrative) that do not relate
directly to tower performance. We define "annualized tower cash flow" as
tower cash flow for the last calendar quarter attributable to our site
leasing business multiplied by four.
(d) Includes the value of Class A common stock issued in connection with
acquisitions.
(e) For purposes of calculating the ratio of earnings to fixed charges,
earnings represent net loss before income taxes and extraordinary items,
interest expense, the component of rental expense believed by management to
be representative of the interest factor thereon, and amortization of
original issue discount and debt issue costs. Fixed charges consist of
interest expense, the component of rental expense believed by management to
be representative of the interest factor thereon, amortization of original
issue discount and debt issue costs and preferred dividends. We had a
deficiency in earnings to fixed charges of $24.0 million and $33.7 million
for 1998 and 1999, respectively.
(f) Annualized EBITDA represents EBITDA for the most recent quarter times four.
EBITDA for the quarter ended December 31, 2000 was $10.4 million and
annualized EBITDA was $41.4 million.
12
RISK FACTORS
Holders of old notes should carefully consider the information set forth
under the caption "Risk Factors" and all other information set forth in this
prospectus before tendering their old notes in the exchange offer. The risk
factors set forth in this prospectus, other than "Risk Factors--There could be
negative consequences to you if you do not exchange your old notes for new
notes," are generally applicable to the old notes as well as the new notes.
Risks Relating to Our Business
Our substantial indebtedness could adversely affect our financial health and
prevent us from fulfilling our payment obligations.
As indicated below, we have and will continue to have a significant amount
of indebtedness relative to our equity size.
At December 31, 2000 After Note Offering(a)
-------------------- ----------------------
(in thousands)
Total indebtedness.................. $284,273 $709,273
Stockholders' equity................ $538,160 $533,397
--------
(a) Subsequent to December 31, 2000, we borrowed $30.0 million under our
revolving line of credit. In February 2001, we issued $500.0 million of
the old notes and used $105.0 million to repay all amounts outstanding
under our senior credit facility. In connection with the termination of
our senior credit facility, we recorded an extraordinary loss of $4.8
million related to the write-off of deferred financing fees associated
with our existing senior credit facility in the first quarter of 2001.
Our substantial indebtedness could have important consequences to you. For
example, it could:
. limit our ability to repay the notes and our 12% senior discount notes;
. limit our ability to fund future working capital, capital expenditures
and research and development costs;
. limit our flexibility in planning for, or reacting to, changes in our
business and the industry in which we operate;
. place us at a competitive disadvantage to our competitors that are less
leveraged; and
. limit, along with the financial and other restrictive covenants in our
indebtedness, among other things, our ability to borrow additional
funds. Failing to comply with those covenants could result in an event
of default.
Our ability to service our debt obligations will depend on our future
operating performance. If we are unable to generate sufficient cash flow from
operations to service our indebtedness, we will be forced to adopt an
alternative strategy that may include actions such as reducing, delaying or
eliminating acquisitions of towers or related service companies, delaying tower
construction and other capital expenditures, selling assets, restructuring or
refinancing our indebtedness or seeking additional equity capital. We may not
be able to effect any of these alternative strategies on satisfactory terms, if
at all. The implementation of any of these alternative strategies could have a
material adverse effect on our growth strategy.
Our earnings have been insufficient to cover our fixed charges since the
issuance of our 12% senior discount notes, treating the non-cash amortization
of the original issue discount on the 12% senior discount notes as a fixed
charge. This deficiency will increase as a result of the issuance of $500.0
million of old notes completed in February 2001. We expect our earnings to
continue to be insufficient to cover our fixed charges
13
for the foreseeable future. We may incur substantial additional indebtedness in
the future. If new debt is added to our current debt levels, the related risks
that we face could intensify.
Our debt instruments contain restrictive covenants that could adversely affect
our business by limiting flexibility.
The indentures governing the notes and our 12% senior discount notes each
contain certain restrictive covenants. In addition, we intend to enter into a
new senior credit facility in the future and this new facility will also likely
contain restrictive covenants and require us to maintain specified financial
ratios and meet financial condition tests. Our ability to comply with these
covenants and meet these financial ratios and tests can be affected by events
beyond our control, and we may not be able to meet these covenants, ratios and
tests. A breach of any of these covenants could result in an event of default
under the indentures governing the 10 1/4% senior notes and our 12% senior
discount notes. Upon the occurrence of our bankruptcy, the outstanding
principal, together with all accrued interest, will automatically become
immediately due and payable. If any other event of default, including a
continuing breach of our covenants, should occur the trustee or a percentage of
such noteholders can elect to declare all amounts of principal outstanding,
together with all accrued interest, to be immediately due and payable.
Our quarterly operating results fluctuate and therefore should not be
considered indicative of our long-term results.
The number of towers we build, the number of tenants we add to our towers
and the demand for our site development services fluctuate from quarter to
quarter and should not be considered as indicative of long-term results.
Numerous factors cause these fluctuations, including:
. the timing and amount of our customers' capital expenditures;
. the business practices of customers, such as deferring commitments on
new projects until after the end of the calendar year or the customers'
fiscal years;
. the number and significance of active customer engagements during a
quarter;
. delays relating to a project or tenant installation of equipment;
. seasonal factors, such as weather, vacation days and total business days
in a quarter;
. employee hiring;
. the use of consultants by our customers; and
. the rate and volume of wireless service providers' network development.
Although the demand for our services fluctuates, we incur significant fixed
costs, such as maintaining a staff and office space in anticipation of future
contracts. The timing of revenues is difficult to forecast because our sales
cycle may be relatively long and may depend on factors such as the size and
scope of assignments, budgetary cycles and pressures and general economic
conditions. In addition, under lease terms typical in the tower industry,
revenue generated by new tenant leases usually commences upon installation of
the tenant's equipment on the tower rather than upon execution of the lease,
which can be 90 days or more after the execution of the lease.
We may be adversely affected by an economic slowdown.
Our business may be adversely affected by periods of economic slowdown or
recession. During periods of economic slowdown or recession, wireless carriers
may be unable to raise sufficient capital to expand their networks or may
choose to slow or stop capital expenditures. Any material decline in the
availability of capital
14
for, or in capital expenditures by, our customers would likely result in a
decrease in the demand for tenant space on our towers and for our site
development services.
We may not secure as many site leasing tenants as planned.
If tenant demand for tower space decreases, we may not be able to
successfully grow our site leasing business. This may have a material adverse
effect on our strategy and revenue growth. Our plan for the growth of our site
leasing business largely depends on our management's expectations and
assumptions concerning future tenant demand for independently-owned towers.
Tenant demand includes both the number of tenants and the lease rates they are
willing to pay. We bear a greater risk from lower tenant demand than other
tower companies that have towers with positive cash flow, because the majority
of our towers are newly constructed and have little or no positive cash flow at
the time of construction.
Wireless service providers that own and operate their own towers and several
of the independent tower companies generally are substantially larger and have
greater financial resources than we do. We believe that tower location and
capacity, price, quality of service and density within a geographic market
historically have been and will continue to be the most significant competitive
factors affecting the site leasing business.
We are not profitable and expect to continue to incur losses.
We are not profitable. The following chart shows the net losses we incurred
for the periods indicated:
Year Ended December 31,
-----------------------
1998 1999 2000
------- ------- -------
(in millions)
Net losses........................................... $ 19.9 $ 34.6 $ 28.9
Our losses are principally due to significant depreciation, amortization and
interest expense. We have not achieved profitability and expect to continue to
incur losses for the foreseeable future.
Increased competition to purchase existing towers and to build new towers may
negatively affect the success of our growth strategy.
Increased competition to purchase existing towers and to build new towers
may negatively affect the success of our growth strategy. We compete for the
opportunity to build new towers primarily with site developers, wireless
carriers and other independent tower companies. We believe that competition for
the opportunity to build new towers will increase and that additional
competitors will enter the tower market. Some of these additional competitors
have or are expected to have greater financial resources than we do.
We compete with:
. wireless service providers that own and operate their own towers;
. site development companies that acquire antenna space on existing towers
for wireless service providers, manage new tower construction and
provide site development services;
. other large independent tower companies; and
. smaller local independent tower operators
for towers to acquire and for sites to construct towers.
Our growth strategy depends in part on our ability to acquire and operate
existing towers not built by us to expand our existing tower network. Increased
competition for acquisitions may result in fewer acquisition
15
opportunities for us and higher acquisition prices. We regularly explore
acquisition opportunities, and we are currently actively negotiating to acquire
additional towers. As of December 31, 2000, we had agreements to acquire 677
towers in 33 separate transactions for an aggregate purchase price of $218.5
million, including $90.0 million for all 275 towers from TeleCorp and $85.5
million for the additional 273 towers from US Unwired, or an average
acquisition price of approximately $323,000 per tower. While all of the towers
acquired from TeleCorp and US Unwired will generate revenues immediately upon
consummation of their respective acquisition, the towers will not at such time
be profitable. We cannot assure you that these towers will ever be profitable
because these towers will be profitable only if we are able to sign additional
leases with third parties for the location of antennas on these towers. All of
these acquisitions are subject to a number of conditions and may or may not
close.
We may not be able to identify, finance and complete future acquisitions of
towers or tower companies on acceptable terms or may not be able to profitably
manage and market available space on any towers that we acquire. We may also
face challenges in integrating newly acquired towers or tower companies with
our operations and may face difficulties in retaining current lessees on newly
acquired towers.
If our carrier-directed new tower build projects are unsuccessful in yielding
binding agreements or completed towers, our growth strategy or business may be
negatively affected.
If our carrier-directed new tower build projects are unsuccessful in
yielding binding agreements or completed towers, our growth strategy or
business may be negatively affected. A carrier directive is an indication of
interest from a wireless carrier for us to build a tower which we will own, on
which they will place their antenna. Upon completion of the tower, the wireless
carrier would lease space on the tower. A carrier directive, however, does not
require the wireless carrier to actually lease space on the tower. That
obligation does not arise until a lease is signed. We generally will not
commence construction of a tower on a carrier-directed location until a lease
is signed. As of December 31, 2000, we had carrier directives to build
approximately 600 towers under build-to-suit programs for wireless service
providers. We believe that the majority of these carrier directives will result
in new towers built and owned by us and long-term leases for antenna space on
such towers. However, there are numerous factors that may prevent carrier
directives from resulting in leases, including:
. FAA, FCC or zoning restrictions that may prevent the building of a
communication tower;
. the results of the review of the business, financial and legal aspects
of the transactions conducted by us or our customers;
. the lease price; and
. the ability of the carriers who have awarded a directive to withdraw the
directive.
As a result, we cannot assure you as to the percentage of current and future
carrier directives that will ultimately result in constructed towers and tenant
leases.
We will need to seek additional financing to fund our business plan.
Our business strategy contemplates substantial capital expenditures for the
expansion of our tower portfolio. We intend to increase the number of towers we
own and lease by agreeing with wireless carriers to assume ownership or control
of their existing towers, by pursuing build-to-suit opportunities and by
exploring other tower acquisition opportunities. To the extent we are unable to
finance our future capital expenditures, we will be unable to achieve our
currently contemplated business goals.
Our cash capital expenditures for the year ended December 31, 2000 were
$445.3 million. We currently estimate that we will make at least $400.0 million
to $450.0 million of cash capital expenditures during the
16
year ending December 31, 2001, which will be primarily for the construction and
acquisition of towers, tower companies and/or related businesses. This estimate
includes capital expenditures planned in connection with the TeleCorp and US
Unwired transactions. We expect to fund $400.0 million of these planned capital
expenditures from the proceeds from the sale of the old notes, that resulted in
net proceeds of $484.2 million, cash on hand and cash flow from operations. In
addition, we intend to seek a new senior credit agreement on terms no less
favorable to us than our prior senior credit facility that we have terminated.
Thereafter, however, or in the event we exceed our currently anticipated cash
capital expenditures by December 31, 2001, we anticipate that we will need to
seek additional equity or debt financing to fund our business plan. Additional
financing, including a new senior credit facility, may not be available on
commercially acceptable terms or at all, and additional debt financing may not
be permitted by the terms of our existing indebtedness, including the notes and
12% senior discount notes. Prior to March 1, 2003, interest expense on our 12%
senior discount notes will consist solely of non-cash accretion of original
issue discount and will not require cash interest payments. After that time,
our 12% senior discount notes will have increased to $269.0 million and will
require annual cash interest payments of approximately $32.3 million. If we are
required to issue additional common equity to finance our capital expenditures,
it could be dilutive to our existing shareholders.
Managing our expansion and integrating acquisitions may strain our resources
and reduce our cash flow.
Expanding our business may impose significant strains on our management,
operating systems and financial resources. The pursuit and integration of newly
constructed towers in addition to future acquisitions, investments, joint
ventures and strategic alliances will require substantial attention from our
senior management, which will limit the amount of time available to devote to
our existing operations.
From January 1, 2000 to December 31, 2000, our work force increased from
approximately 600 to approximately 1,000 employees. This growth has placed, and
will likely continue to place, a substantial strain on our administrative,
operational and financial resources. In addition, as part of our business
strategy, we may acquire complementary businesses such as telecommunications
services companies or expand into new businesses. Acquisitions involve a number
of potential risks, including the potential loss of customers, and the
inability to productively combine disparate company cultures and facilities or
manage operating sites in geographically diverse markets. We may not be able to
manage our growth successfully. Our management, personnel or operational and
financial control systems may not be adequate to support expanded or
complementary operations. Any of these inabilities or inadequacies could cause
a significant increase in our expenses and reduce our cash flow.
We are subject to numerous regulations that may prevent, delay, or increase the
cost of building or operating towers.
Extensive local, state and federal regulations may prevent, delay or
increase the cost of building or operating towers. Before we can build a new
tower, either for a wireless communications carrier or for our own account, we
must receive approval under local regulations. Local regulations include city
or other local ordinances, zoning restrictions and restrictive covenants
imposed by community developers. These regulations vary greatly, but typically
require tower owners to obtain approval from local officials or community
standards organizations prior to tower construction. In addition, as the
concern over tower proliferation has grown in recent years, certain communities
have placed restrictions on new tower construction or have delayed granting
permits required for construction. If we cannot receive local governmental
approvals or if it is expensive or time consuming to obtain these approvals,
then our results of operations will be negatively impacted.
Both the FCC and FAA regulate towers and other sites used for wireless
communications transmitters and receivers. Wireless communications devices
operating on towers are separately regulated and independently licensed based
upon the particular frequency used.
17
The construction or modification of communication sites is also subject to
the National Environmental Policy Act, which requires additional review of any
tower that may have a significant effect upon the quality of the human
environment. In addition, the operation of our towers is subject to federal,
state and local environmental laws and regulations regarding the use, storage,
disposal, emission, release and remediation of hazardous and non-hazardous
substances, materials or wastes. Under certain of these environmental laws, we
could be held strictly liable for the remediation of hazardous substance
contamination at our facilities or at third party waste disposal sites, and
could also be held liable for any personal or property damage related to the
contamination.
Our estimates regarding our growth rate and our anticipated financial
performance include the costs of complying with these regulations, as they
currently exist. If new regulations are introduced or existing regulations are
modified it could increase our cost of operations and decrease our cash flow.
If demand for wireless communication services decreases, our revenue will be
adversely affected.
Substantially all of our customers to date have been providers of wireless
communications services. If demand for wireless communication services
decreases, our revenue growth will be, and our revenue may be, adversely
affected. Demand for both our site leasing and site development services is
dependent on demand for communication sites from wireless service providers,
which, in turn, is dependent on the demand for wireless services. A slowdown in
the growth of, or reduction in demand in, a particular wireless communication
segment could adversely affect the demand for communication sites. Most types
of wireless services currently require ground-based network facilities,
including communication sites for transmission and reception. The extent to
which wireless service providers lease these communication sites depends on a
number of factors beyond our control, including:
. the level of demand for wireless services;
. the financial condition and access to capital of wireless service
providers;
. the strategy of wireless service providers with respect to owning or
leasing communication sites;
. government licensing of broadcast rights; and
. changes in telecommunications regulations and general economic
conditions.
In addition, wireless voice service providers frequently enter into roaming
agreements with competitors allowing them to use another's wireless
communications facilities to accommodate customers who are out of range of
their home provider's services. Wireless voice service providers may view these
roaming agreements as a superior alternative to leasing antenna space on
communications sites owned or controlled by us. The proliferation of these
roaming agreements could have a material adverse effect on our revenue.
We depend on a relatively small number of customers for most of our revenue.
We derive a significant portion of our revenue from a small number of
customers that vary at any given time, particularly in the site development
services side of our business. The loss of any significant customer could have
a material adverse effect on our revenue.
Following is a list of significant customers and the percentage of total
revenues derived from such customers:
Year Ended December 31,
-----------------------
1999 2000
-----------------------
Sprint............................................... 17.3 10.7
Cingular............................................. 12.5 less than 10.0
18
Our site development customers engage us on a project-by-project basis, and
a customer can generally terminate an assignment at any time without penalty.
In addition, a customer's need for site development services can decrease, and
we may not be successful in establishing relationships with new customers.
Moreover, our existing customers may not continue to engage us for additional
projects.
The substantial majority of our existing carrier directives under build-to-
suit programs are from Alamosa PCS, AT&T Wireless, Georgia PCS, Horizon PCS and
TeleCorp PCS.
Due to the long-term expectations of revenue from tenant leases, the tower
industry is very sensitive to the creditworthiness of its tenants. Wireless
service providers often operate with substantial leverage, and financial
problems for our customers could result in uncollected accounts receivable, in
the loss of customers and the associated lease revenues, or in a reduced
ability of these customers to finance expansion activities. In July 2000,
PageNet, one of our site leasing customers, filed for bankruptcy. For the year
ended December 31, 2000, PageNet constituted less than 5% of our total
revenues.
If we commence international operations in the future it could strain our
resources and negatively affect our growth strategy and revenue.
We are currently evaluating international opportunities and we would like to
begin operating internationally if we find an opportunity we believe is
appropriate to pursue. We may commence international operations at any time.
Initiating international operations may strain our resources and negatively
affect our growth strategy and revenue. If we commence international
operations, we will be subject to various political, economic and other
uncertainties, including:
. difficulties and costs of staffing and managing international
operations;
. different technology standards;
. fluctuations in currency exchange rates or the implementation of
currency exchange controls;
. political and economic instability;
. unexpected changes in regulatory requirements; and
. potentially adverse tax consequences.
Any of these factors could delay or preclude our ability to generate revenue
in any international markets that we may enter. Accordingly, we cannot assure
that if we begin international operations our strategies will prove to be
effective or that management's goals will be achieved.
Our towers are subject to damage from natural disasters.
Our towers are subject to risks associated with natural disasters such as
tornadoes, hurricanes and earthquakes. We maintain insurance to cover the
estimated cost of replacing damaged towers, but these insurance policies are
subject to caps and deductibles. We also maintain third party liability
insurance to protect us in the event of an accident involving a tower. A tower
accident for which we are uninsured or underinsured, or damage to a tower or
group of towers could require us to make significant capital expenditures and
may have a material adverse effect on our operations.
New technologies may have a material adverse effect on our growth rate and
results of operations.
The emergence of new technologies could reduce the demand for space on our
towers. This could have a material adverse effect on our growth rate and
results of operations. For example, the FCC has granted license applications
for several low-earth orbiting satellite systems that are intended to provide
mobile voice and data
19
services. Although these systems are highly capital intensive and have only
begun to be tested, mobile satellite systems could compete with land-based
wireless communications systems. In addition, products are currently being
developed which may permit multiple wireless carriers to use a single antenna,
or to increase the range and capacity of an antenna.
Steven E. Bernstein controls the outcome of shareholder votes.
Steven E. Bernstein, our Chairman and Chief Executive Officer, controls 100%
of the outstanding shares of Class B common stock. As of March 15, 2001, Mr.
Bernstein controlled approximately 57% of the total voting power of both
classes of our common stock. As a result, Mr. Bernstein has the ability to
control the outcome of all matters determined by a vote of our common
shareholders when voting together as a single class, including the election of
all of our directors.
The loss of the services of certain of our executive officers may negatively
affect our business.
Our success depends to a significant extent upon the continued services of
Steven E. Bernstein, our Chairman and Chief Executive Officer, Jeffrey A.
Stoops, our President, Ronald G. Bizick, II, our Executive Vice President and
Chief Operating Officer-U.S. Site Development, and John Marino, our Senior Vice
President and Chief Financial Officer. The loss of the services of any of
Messrs. Bernstein, Stoops, Bizick or Marino may have a material adverse effect
on our business. Each of Messrs. Bizick and Stoops has an employment agreement.
We do not have an employment agreement with Messrs. Bernstein or Marino. Mr.
Bernstein's compensation and other terms of employment are determined by the
Board of Directors.
If we are unable to attract, retain or manage skilled employees it could have a
material adverse effect on our business.
Our business, particularly site development services, involves the delivery
of professional services and is labor-intensive. The loss of a significant
number of employees, our inability to hire a sufficient number of qualified
employees or adequately develop and motivate the skilled employees we have
hired could have a material adverse effect on our business. We compete with
other wireless communications firms and other enterprises for employees with
the skills required to perform our services. We cannot assure you that we will
be able to attract and retain a sufficient number of highly-skilled employees
in the future or that we will continue to be successful in training, retaining
and motivating employees.
Risks Relating to the Notes
The notes are structurally subordinate to the debt of our subsidiaries,
including any senior credit facility.
We have no operations of our own and derive substantially all of our revenue
from the operations of our subsidiaries. Our subsidiaries will not be
guarantors of the notes. In the event of our bankruptcy or the bankruptcy of
any of our subsidiaries, the holders of their liabilities, including
indebtedness, and trade creditors of our subsidiaries would generally be
entitled to payment of their claims from the assets of the affected
subsidiaries before those assets were made available for distribution to us. As
a result, the claims of holders of the notes will effectively rank junior to
the claims of all of the creditors of our subsidiaries, including trade
creditors and the lenders under any senior credit facility we may obtain in the
future. If any indebtedness of our subsidiaries were to be accelerated, we
cannot assure you that the assets of the subsidiaries remaining after payment
of such indebtedness would be sufficient to repay our indebtedness in full,
including the notes and the 12% senior discount notes. As of December 31, 2000,
as adjusted for the offering of the old notes, we would have had $709.0 million
of debt that is pari passu with the notes.
The notes are not secured by any of our assets. Any senior credit facility
we obtain in the future may be secured by a lien on substantially all of our
assets and the assets of our domestic subsidiaries and a pledge of all of the
outstanding capital stock of each of our domestic subsidiaries. If we become
insolvent or are
20
liquidated, or payment under indebtedness is accelerated, our lenders would be
entitled to exercise the remedies as secured lenders under applicable law and
will have a claim on such assets that would rank senior to the holders of the
notes. The liquidation value of our assets remaining after payment of such
secured indebtedness may not be sufficient to repay in full our unsecured
indebtedness, including the notes and the 12% senior discount notes.
Our dependence on our subsidiaries for cash flow may negatively affect our
business and our ability to pay the principal, interest and other amounts due
on the notes.
We are a holding company with no business operations of our own. Our only
significant asset is and is expected to be the outstanding capital stock of our
subsidiaries. We conduct, and expect to conduct, all of our business operations
through our subsidiaries. Accordingly, our ability to pay our obligations,
including the principal and interest, premium, if any, and liquidated damages,
if any, on the 12% senior discount notes and the notes is dependent upon the
earnings of our subsidiaries and their distribution of funds to us. We
currently expect that the earnings and cash flow of our subsidiaries will be
retained and used by them in their operations, including servicing their debt
obligations, except as necessary to be distributed to us to cover holding
company expenses, including interest payments on the notes. None of our
subsidiaries will have any obligation, contingent or otherwise, to make any
funds available to us for payment of principal or interest on the notes. The
ability of our subsidiaries to pay dividends or transfer assets may be
restricted under applicable state law and contractual restrictions, including
the terms of any senior credit facility. Although the indenture governing the
notes limits the ability of our subsidiaries to enter into consensual
restrictions on their ability to pay dividends to us, these limitations are
subject to a number of significant qualifications and exceptions. Our right or
the right of our creditors, including holders of the notes, to participate in
the assets of any subsidiary upon the liquidation or reorganization of that
subsidiary will be subject to the prior claims of that subsidiary's creditors,
including holders of its indebtedness and trade creditors.
We may not be able to purchase your notes upon a change of control.
Upon the occurrence of specified change of control events, the indenture
governing the notes and the 12% senior discount notes will require us to offer
to purchase each holder's notes at a price of 101% of their principal amount
plus accrued and unpaid interest to the date of purchase. We may not have
sufficient financial resources to purchase all of the notes that holders tender
to us upon a change of control. The occurrence of a change of control may also
constitute an event of default under any senior credit facility we obtain in
the future. If an event of default under any senior credit facility we obtain
occurs, our bank lenders may have the right to prohibit any purchase of the
notes, in which event we would be in default on the notes. In addition, some
important corporate events, such as leveraged recapitalizations that would
increase the level of our indebtedness, may not constitute a "change of
control" under the terms of the indenture governing the notes. See "Description
of the Notes--Purchase at the Option of Holders--Change of Control."
No market for the notes existed prior to this offering.
The notes are a new issue of securities with no established trading market
and have not previously been listed on any securities exchange or quoted on any
automated dealer quotation system. Each of the initial purchasers has informed
us that it intends to make a market in the notes after this exchange is
completed. However, the initial purchasers may cease their market making at any
time in their sole discretion during the pendency of this exchange offer or the
effectiveness of this shelf registration statement.
We cannot assure you that an active trading market for the notes will
develop or that you will be able to sell your notes at a particular time or
that the prices that you receive when you sell will be favorable. We also
cannot assure you as to the level of liquidity of the trading market for the
notes or, in the case of any holders of notes that do not exchange them, the
trading market for the notes following completion of the exchange offer.
In addition, the liquidity of the trading market in the notes, and the
market price quoted for the notes, may be adversely affected by changes in the
overall market for high yield securities and by changes in our financial
21
performance or prospects or in the prospects for companies in our industry
generally. Historically, the market for high-yield debt securities, like the
notes, has been subject to disruptions that have caused substantial volatility
in the prices of those securities. As a result, you cannot be sure that an
active trading market will develop for the notes.
There could be negative consequences to you if you do not exchange your old
notes for new notes.
Any old notes tendered and exchanged in the exchange offer will reduce the
aggregate principal amount of old notes outstanding. Because we anticipate that
most holders will elect to exchange their old notes for new notes due to the
absence of most restrictions on the resale of new notes, we anticipate that the
liquidity of the market for any old notes remaining outstanding after the
exchange offer may be substantially limited. Following the consummation of the
exchange offer, holders who did not tender their old notes generally will not
have any further registration rights under the registration rights agreement,
and these old notes will continue to be subject to restrictions on transfer.
The old notes are currently eligible for sale under Rule 144A through the
Portal Market.
As a result of making the exchange offer, we will have fulfilled our
obligations under the registration rights agreement relating to the old notes.
Holders who do not tender their old notes generally will not have any further
registration rights or rights to receive the liquidated damages specified in
the registration rights agreement for our failure to register the new notes.
Any old notes that are not exchanged for new notes will remain restricted
securities. Accordingly, the old notes may be resold only:
. to us or one of our subsidiaries;
. to a qualified institutional buyer;
. to an institutional accredited investor;
. to a party outside the United States under Regulation S under the
Securities Act;
. under an exemption from registration provided by Rule 144 under the
Securities Act; or
. under an effective registration statement.
22
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents that are incorporated by reference into
this prospectus contain forward-looking statements. These statements concern
expectations, beliefs, projections, future plans and strategies, anticipated
events or trends and similar expressions concerning matters that are not
historical facts. Specifically, this prospectus and the documents incorporated
into this prospectus by reference contain forward-looking statements regarding:
. our strategy to transition the primary focus of our business from site
development services toward the site leasing business, including our
intent to make strategic acquisitions of towers and tower companies;
. anticipated trends in the site development industry and its effect on
our revenues and profits;
. our estimates regarding the future development of the site leasing
industry and its effect on our site leasing revenues;
. our plan to continue to construct and acquire tower assets and the
resulting effect on our revenues, capital expenditures, expenses and net
income;
. our ability to successfully consummate letters of intent or definitive
agreements for newly built towers or acquisitions of existing towers and
the resulting effect on our financial operations;
. our plan to commence international operations if we find an opportunity
we believe is appropriate to pursue;
. our estimate of the amount of capital expenditures for the twelve months
ending December 31, 2001 that will be required for the construction or
acquisition towers; and
. our intention to fund capital expenditures for the twelve months ending
December 31, 2001 from the net proceeds from the sale of the old notes,
cash on hand and cash flow from operations.
These forward-looking statements reflect our current views about future
events and are subject to risks, uncertainties and assumptions. We wish to
caution readers that certain important factors may have affected and could in
the future affect our actual results and could cause actual results to differ
significantly from those expressed in any forward-looking statement. The most
important factors that could prevent us from achieving our goals, and cause the
assumptions underlying forward-looking statements and the actual results to
differ materially from those expressed in or implied by those forward-looking
statements include, but are not limited to, the following:
. our ability to secure as many site leasing tenants as planned;
. our ability to maintain and expand our site leasing business and
maintain or expand our site development business;
. our ability to complete construction of new towers on a timely and cost-
efficient basis, including our ability to successfully address zoning
issues, carrier design changes, changing local market conditions and the
impact of adverse weather conditions;
. our ability to identify and acquire new towers, the ability to obtain
third party consents, and the satisfactory resolution of any due
diligence review of potential acquisitions;
. our ability to retain current lessees on newly acquired towers;
. our ability to realize economies of scale for newly acquired towers;
. the continued dependence on towers by the wireless communications
industry;
. our ability to compete effectively for new tower opportunities and site
development services in light of increased competition; and
23
. our ability to enter into a new senior credit facility and raise
substantial additional financing to expand our tower holdings.
USE OF PROCEEDS
We will not receive any proceeds from the issuance of the new notes offered
in the exchange offer. In consideration for issuing the new notes, we will
receive in exchange old notes in like principal amount the terms of which are
identical in all respects to the new notes except for the transfer restrictions
and registration rights. The old notes surrendered in exchange for new notes
will be retired and cancelled and cannot be reissued. Accordingly, issuance of
the new notes will not result in any increase in our indebtedness.
The net proceeds from the sale of the old notes was approximately $484.2
million, after deducting offering expenses payable by us. We used approximately
$105.0 million of the net proceeds from the offering to repay all outstanding
debt under our senior credit facility and terminate the facility. We used
approximately $66.5 million to purchase the first 203 towers under the TeleCorp
Agreement and expect to use approximately $23.5 million to purchase the
remaining 72 TeleCorp towers and approximately $54.1 million to purchase 173
towers from US Unwired. We expect to use the remainder to finance the
construction and acquisition of additional towers and related businesses and
for general working capital purposes. We have used the proceeds of our
revolving credit loans to finance our business plan. As of December 31, 2000,
the interest rate of revolving credit loans outstanding under the senior credit
facility was 10.75% and the interest rate on our term loan was 10.06%. The
revolving credit loans were to mature on December 31, 2004 and the term loan
was to mature on December 31, 2005.
24
CAPITALIZATION
The following table sets forth our consolidated capitalization as of
December 31, 2000 on a historical basis and as adjusted for the offering of the
old notes and the application of the net proceeds. You should read this table
in conjunction with "Selected Historical Financial Information" and the
Consolidated Financial Statements and their related notes incorporated by
reference into this prospectus.
As of December 31,
2000
--------------------
Actual As Adjusted
-------- -----------
(dollars in
thousands)
Cash and cash equivalents(a).............................. 14,980 424,180
-------- ---------
Long-term debt (less current maturities):
Senior credit facility(a)............................... 72,500 --
12% senior discount notes due 2008...................... 209,042 209,042
Other long-term borrowings.............................. 125 125
Senior notes due 2009................................... -- 500,000
-------- ---------
Total long-term debt.................................. 281,667 709,167
Preferred stock (30,000,000 shares authorized; 0 shares
issued)..................................................
Stockholders' equity:
Class A common stock (100,000,000 shares authorized;
40,464,837 issued)(b).................................. 410 410
Class B common stock (8,100,000 shares authorized;
5,465,595 shares issued)............................... 55 55
Paid-in capital......................................... 627,370 627,370
Accumulated deficit(c).................................. (89,674) (94,436)
-------- ---------
Total stockholders' equity............................ 538,161 533,399
-------- ---------
Total capitalization................................ 819,828 1,242,566
======== =========
--------
(a) Subsequent to December 31, 2000, we borrowed approximately $30.0 million
under the revolving line of credit. We repaid the total amount of
revolving debt outstanding with the proceeds of the offering of the old
notes. Cash and cash equivalents as adjusted for the offering of the old
notes and further adjusted for this repayment would be $394.2 million.
(b) This number does not include (1) 3.1 million shares of Class A common
stock issuable upon exercise of outstanding stock options; (2) 2.2 million
shares of Class A common stock issuable under our two registration
statements on Form S-4 that we filed with the Commission on January 11,
2000 and September 27, 2000, as amended; (3) 1.9 million shares that are
reserved for issuance upon exercise of options that may be granted in the
future under our 1999 Equity Participation Plan; (4) 451,505 shares that
are reserved for issuance under our 1999 Employee Stock Purchase Plan; or
(5) 300,000 shares that are issuable if the earnings targets identified in
an acquisition agreement are met.
(c) In connection with the termination of our senior credit facility, we
recorded an extraordinary loss of $4.8 million related to the write-off of
deferred financing fees associated with the senior credit facility.
25
SELECTED HISTORICAL FINANCIAL INFORMATION
The following table sets forth selected historical financial data as of and
for the years ended December 31, 1996, 1997, 1998, 1999 and 2000. The financial
data for each of the full fiscal years have been derived from, and are
qualified by reference to, our audited financial statements, which Arthur
Andersen LLP, our independent certified public accountants, have audited. You
should read the information set forth below in conjunction with the
Consolidated Financial Statements and their related notes incorporated by
reference into this prospectus.
Year Ended December 31,
--------------------------------------------------
1996 1997 1998 1999 2000
------- -------- --------- --------- ---------
(dollars in thousands)
Operating Data:
Revenues:
Site development.......... $60,276 $ 48,241 $ 46,705 $ 60,570 $ 115,892
Site leasing.............. 4,530 6,759 12,396 26,423 52,014
------- -------- --------- --------- ---------
Total revenues............ 64,806 55,000 59,101 86,993 167,906
------- -------- --------- --------- ---------
Cost of revenues
(exclusive of
depreciation shown
below):
Cost of site
development............ 39,822 31,470 36,500 45,804 88,892
Cost of site leasing.... 3,638 5,356 7,281 12,134 19,502
------- -------- --------- --------- ---------
Total cost of
revenues............. 43,460 36,826 43,781 57,938 108,394
------- -------- --------- --------- ---------
Gross profit.............. 21,346 18,174 15,320 29,055 59,512
Selling, general and
administrative(a)........ 17,754 12,033 18,302 19,784 27,799
Depreciation and
amortization............. 160 514 5,802 16,557 34,831
------- -------- --------- --------- ---------
Operating income (loss)... 3,432 5,627 (8,784) (7,286) (3,118)
Interest and other
expense, net............. (132) 236 (12,641) (26,378) (24,564)
(Provision) benefit for
income taxes(b).......... (1,320) (5,596) 1,524 223 (1,233)
Extraordinary item........ -- -- -- (1,150) --
------- -------- --------- --------- ---------
Net income (loss)......... 1,980 267 (19,901) (34,591) (28,915)
Dividends on preferred
stock.................... -- (983) (2,575) 733 --
------- -------- --------- --------- ---------
Net income (loss)
available to common
shareholders............. $ 1,980 $ (716) $ (22,476) $ (33,858) $ (28,915)
======= ======== ========= ========= =========
Other Data:
EBITDA(c)................. $10,603 $ 7,155 $ (2,377) $ 9,582 $ 32,026
Annualized tower cash
flow(d).................. 991 1,946 8,088 18,692 31,056
Capital expenditures(e)... 145 17,676 138,124 226,570 494,053
Cash provided (used) by:
Operating activities.... 1,215 7,829 7,471 23,134 47,516
Investing activities.... (145) (17,676) (138,124) (208,870) (445,280)
Financing activities.... (1,036) 15,645 151,286 162,124 409,613
Ratio of earnings to fixed
charges(f)............... 33.8x 7.7x -- -- 0.1x
Tower Data:
Towers owned at the
beginning of period...... -- -- 51 494 1,163
Towers constructed........ -- 15 310 438 779
Towers acquired........... -- 36 133 231 448
------- -------- --------- --------- ---------
Total towers at the end of
period................... -- 51 494 1,163 2,390
(Footnotes on following page)
26
As of December 31,
---------------------------------------------
1996 1997 1998 1999 2000
------- ------- -------- -------- --------
(dollars in thousands, except per tower
data)
Balance Sheet Data:
Cash and cash equivalents...... $ 311 $ 6,109 $ 26,743 $ 3,131 $ 14,980
Property, plant and equipment
(net)......................... 632 17,829 150,946 338,892 765,815
Total assets................... 18,060 44,797 214,573 429,823 948,818
Total debt..................... 4,921 10,184 182,573 320,767 284,273
Redeemable preferred stock..... -- 30,983 33,558 -- --
Common stockholders' equity
(deficit)..................... $ (102) $(4,344) $(26,095) $ 48,582 $538,160
Certain Ratios:
Net debt to annualized
EBITDA(g)..................... 6.5x
Net debt per tower............. $112,675
--------
(a) For the year ended December 31, 1997, selling, general and administrative
expenses included non-cash compensation expense of $1.0 million incurred in
the consolidation of the predecessor companies. For the year ended December
31, 1998, selling, general and administrative expenses included non-cash
compensation expense of $0.6 million incurred in connection with the
issuance of stock options and Class A common stock. For the year ended
December 31, 1999, selling, general and administrative expenses included
non-cash compensation expense of $0.3 million incurred in connection with
stock option activity. For the year ended December 31, 2000, selling,
general and administrative expenses included non-cash compensation expense
of $0.3 million incurred in connection with stock option and restricted
stock activity.
(b) Provision for income taxes for the year ended December 31, 1997 includes
the tax effect of our conversion to a C corporation.
(c) EBITDA represents earnings (loss) before interest income, interest expense,
other income, income taxes, depreciation, amortization and the non-cash
compensation expense referred to in footnote (a) above. EBITDA is commonly
used in the telecommunications industry to analyze companies on the basis
of operating performance, leverage and liquidity. EBITDA is not intended to
represent cash flows for the periods presented, nor has it been presented
as an alternative to operating income or as an indicator of operating
performance and should not be considered in isolation or as a substitute
for measures of performance prepared in accordance with generally accepted
accounting principles. Companies calculate EBITDA differently and,
therefore EBITDA as presented by us may not be comparable to EBITDA
reported by other companies.
(d) We define "tower cash flow" as site leasing revenue less cost of site
leasing revenue (exclusive of depreciation). Tower cash flow includes
deferred revenue attributable to certain leases. We believe tower cash flow
is useful because it allows you to compare tower performance before the
effect of expenses (selling, general and administrative) that do not relate
directly to tower performance. We define "annualized tower cash flow" as
tower cash flow for the last calendar quarter attributable to our site
leasing business multiplied by four.
(e) Includes the value of Class A common stock issued in connection with
acquisitions.
(f) For purposes of calculating the ratio of earnings to fixed charges,
earnings represent net loss before income taxes and extraordinary items,
interest expense, the component of rental expense believed by management to
be representative of the interest factor thereon, and amortization of
original issue discount and debt issue costs. Fixed charges consist of
interest expense, the component of rental expense believed by management to
be representative of the interest factor thereon, amortization of original
issue discount and debt issue costs and preferred dividends. We had a
deficiency in earnings to fixed charges of $24.0 million and $33.7 million
for 1998 and 1999, respectively.
(g) Annualized EBITDA represents EBITDA for the most recent quarter times four.
EBITDA for the quarter ended December 31, 2000 was $10.4 million and
annualized EBITDA was $41.4 million.
27
DESCRIPTION OF OTHER INDEBTEDNESS
The 12% Senior Discount Notes Due 2008
On March 2, 1998, we privately placed $269.0 million in aggregate principal
amount at maturity of our 12% senior discount notes. This description
summarizes certain terms of the 12% senior discount notes, but does not
describe all of the terms. You should refer to the indenture governing the 12%
senior discount notes, a copy of which was filed as an exhibit to our
Registration Statement on Form S-3 filed with the Commission on January 6,
2000, as amended.
The 12% senior discount notes are unsecured senior obligations of SBA, and
rank equally in right of payment with all existing and future unsecured senior
indebtedness of SBA, including these notes, and senior in right of payment to
future subordinated indebtedness of SBA. Our subsidiaries are not guarantors of
the 12% senior discount notes. The 12% senior discount notes mature on March 1,
2008. The 12% senior discount notes accrete in value until March 1, 2003. After
that date, cash interest will be payable on the 12% senior discount notes at
the rate of 12% per year and will be payable semi-annually, commencing on
September 1, 2003.
Except as stated below, the 12% senior discount notes are not redeemable at
our option prior to March 1, 2004. Thereafter, the 12% senior discount notes
are redeemable at our option, in whole or in part, at any time, at a premium
which is at a fixed percentage that declines to par on or after March 1, 2007,
in each case together with accrued and unpaid interest, if any, to the date of
redemption. In the event we consummate a public equity offering or certain
strategic equity investments prior to March 1, 2001, we may, at our option, use
all or a portion of the proceeds from the offering to redeem up to 20% of the
original aggregate principal amount at maturity of the 12% senior discount
notes at a redemption price equal to 112% of the accreted value of the 12%
senior discount notes to be redeemed, plus accrued and unpaid interest, if any,
thereon to the redemption date, if at least 80% of the original aggregate
principal amount at maturity of the 12% senior discount notes remains
outstanding after each redemption.
Upon the occurrence of certain change of control events, each holder of 12%
senior discount notes has the right to require us to purchase all or a portion
of the holder's senior discount notes at a price equal to 101% of the aggregate
principal amount thereof, together with accrued and unpaid interest to the date
of purchase or, if the 12% senior discount notes are purchased prior to March
1, 2003, at a purchase price equal to 101% of the accreted value of the 12%
senior discount notes on the date of purchase.
The indenture contains certain covenants, including covenants that limit (1)
the incurrence of certain additional indebtedness and issuance of preferred
stock, (2) restricted payments, (3) restrictions on distributions from
restricted subsidiaries, (4) transactions with affiliates, (5) sales of assets
and subsidiary stock (including sale and leaseback transactions), and (6)
mergers or consolidations.
28
THE EXCHANGE OFFER
You can find the definitions of capitalized terms used in this section under
the heading "Description of the Notes--Certain Definitions."
Terms Of The Exchange Offer; Period For Tendering Old Notes
The Old Notes were sold by us on February 2, 2001 to Lehman Brothers Inc.,
Salomon Smith Barney Inc., Deutsche Banc Alex. Brown Inc., Donaldson, Lufkin &
Jenrette Securities Corporation (an affiliate of Credit Suisse First Boston
Corporation), TD Securities (USA) Inc., Barclays Capital Inc. and Wachovia
Securities, Inc. (the "Initial Purchasers") pursuant to a Purchase Agreement
dated January 26, 2001 between us and the Initial Purchasers. As set forth in
this prospectus and in the accompanying letter of transmittal, we will accept
for exchange any and all Old Notes that are properly tendered on or prior to
the expiration date and not withdrawn as permitted below. The term "expiration
date" means the earlier of 5:00 p.m., New York City time on Monday, May 14,
2001 or the date when all Old Notes have been tendered; provided however, that
if we extend the period of time for which the Exchange Offer is open, the term
"expiration date" means the latest time and date to which the Exchange Offer is
extended.
As of the date of this prospectus, $500.0 million aggregate principal amount
of the Old Notes are outstanding. This prospectus, together with the letter of
transmittal, is first being sent on or about the date set forth on the cover
page to all holders of Old Notes at the addresses set forth in the security
register maintained by the trustee or other registrar. Our obligation to accept
Old Notes for exchange is subject to conditions as set forth under "--
Conditions to the Exchange Offer" below.
We expressly reserve the right, at any time or from time to time, to extend
the period of time during which the Exchange Offer is open, and thereby delay
acceptance for exchange of any Old Notes, by public announcement of an
extension to the holders of Old Notes as described below. During any extension,
all Old Notes previously tendered will remain subject to the Exchange Offer and
may be accepted for exchange by us. Any Old Notes not accepted for exchange for
any reason will be returned without expense to the tendering holder promptly
after the expiration or termination of the Exchange Offer.
Old Notes tendered in the Exchange Offer must be $1,000 in principal amount
or any integral multiple of $1,000.
If we make a material change in the terms of the Exchange Offer or the
information concerning the Exchange Offer or waive a material condition to the
Exchange Offer, we will disseminate additional Exchange Offer materials and
extend the Exchange Offer to the extent required by law. In addition, we may,
if we deem appropriate, extend the Exchange Offer for any other reason. If the
principal amount of Old Notes subject to the Exchange Offer is decreased, the
Exchange Offer will remain open at least ten business days from the date we
first give notice to you, by public announcement or otherwise, of that
decrease. In the case of an extension of the Exchange Offer, the announcement
will be issued no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled expiration of the Exchange Offer.
Without limiting the manner in which any public announcement may be made, we
will have no obligation to publish, advertise or otherwise communicate any
public announcement other than by issuing a release to the Dow Jones News
Service.
Registration Covenant; Exchange Offer
Under our registration rights agreement dated February 2, 2001 with the
Initial Purchasers, we have agreed to file with the Commission the Exchange
Offer Registration Statement on the appropriate form under the Securities Act
with respect to the New Notes. Upon the effectiveness of this Exchange Offer
Registration Statement, we will offer to the holders of the Old Notes who are
able to make required representations the opportunity to exchange their Old
Notes for New Notes. Alternatively, we will file with the Commission a Shelf
Registration Statement to cover resales of Transfer Restricted Securities (as
defined below) by the holders
29
of Old Notes who satisfy specific conditions relating to the provision of
information in connection with the Shelf Registration Statement if:
. we are not permitted to consummate the Exchange Offer because it is not
permitted by applicable law or Commission policy; or
. any holder of Old Notes that is a "qualified institutional buyer" (as
defined in Rule 144A under the Securities Act) or an institutional
"accredited investor" (as defined in Rule 501(A)(1), (2), (3) or (7)
under the Securities Act) notifies us at least 30 business days prior to
the consummation of the Exchange Offer that:
. it is prohibited by law or Commission policy from participating in the
Exchange Offer;
. it may not resell the New Notes acquired by it in the Exchange Offer to
the public without delivering a prospectus and the prospectus contained
in the Exchange Offer Registration Statement is not appropriate or
available for such resales; or
. it is a broker-dealer and holds Old Notes acquired directly from us or
one of our affiliates;
We will use our best efforts to cause the applicable Registration Statement
to be declared effective as promptly as possible by the Commission.
"Transfer Restricted Securities" means each Old Note until the earliest of:
. the date on which the Old Note has been exchanged by a person other than
a broker-dealer for a New Note in the Exchange Offer;
. following the exchange by a broker-dealer in the Exchange Offer of an
Old Note for a New Note, the date on which the New Note is sold to a
purchaser who received from the broker-dealer, on or prior to the date
of the sale, a copy of the prospectus contained in the Exchange Offer
Registration Statement;
. the date on which the Old Note has been effectively registered under the
Securities Act and disposed of in accordance with the Shelf Registration
Statement; or
. the date on which the Old Note is distributed to the public pursuant to
Rule 144 under the Securities Act.
The registration rights agreement provides that:
. we will use our best efforts to file an Exchange Offer Registration
Statement with the Commission as promptly as practicable, but in no
event later than 60 days after February 2, 2001, which is the closing
date of the original issuance of the Old Notes;
. we will use our reasonable best efforts to have the Exchange Offer
Registration Statement declared effective within 150 days after February
2, 2001;
. unless the Exchange Offer would not be permitted by applicable law or
Commission policy, we will commence the Exchange Offer and use our
reasonable best efforts to cause the Exchange Offer to be consummated on
the earliest practicable date after the Exchange Offer Registration
Statement has become effective, but in no event later than 180 days
after February 2, 2001; and
. if obligated to file the Shelf Registration Statement, we will use our
best efforts to file the Shelf Registration Statement with the
Commission on or prior to 60 days after the filing obligations arises,
and to cause the Shelf Registration Statement to be declared effective
by the Commission on or prior to 150 days after this obligation arises.
If a registration default (as defined below) occurs, then additional cash
interest ("Liquidated Damages") shall accrue to each holder of Transfer
Restricted Securities, commencing upon the occurrence of such
30
registration default in an amount equal to $.05 per week per $1,000 of the
principal amount of notes held by such holder of Transfer Restricted Securities
for the first 90 day period immediately following the first registration
default. The amount of liquidated damages will increase by an additional $.05
per week per $1,000 of the principal amount of notes with respect to each
subsequent 90 day period (or portion thereof) until all registration defaults
have been cured, up to a maximum rate of liquidated damages of $.50 per week
per $1,000 of the principal amount of the Old Notes. All accrued liquidated
damages shall be paid to the holders of the Old Notes in the same manner as
interest is paid under the notes. Immediately upon the cure of all registration
defaults, accrual of liquidated damages will cease.
A "registration default" means the occurrence of one of the following
events:
. we fail to file any of the registration statements required by the
registration rights agreement on or before the date specified for that
filing;
. any of those registration statements are not declared effective by the
Commission on or prior to the date specified for its effectiveness in
the circumstances required by the registration rights agreement;
. we fail to complete the Exchange Offer within 30 business days after the
effectiveness target date specified in the registration rights
agreement; or
. any registration statement required by the registration rights agreement
is filed and declared effective but thereafter ceases to be effective or
usable for its intended purpose without being succeeded within two
business days by a post-effective amendment to such registration
statement that cures such failure and that is itself immediately
declared effective.
This summary of the provisions of the registration rights agreement is not
complete and is subject to, and is qualified by reference to, all provisions of
the registration rights agreement.
Interest On Exchange Notes
Each New Note will bear interest from the most recent date to which interest
has been paid or duly provided for on the Old Note surrendered in exchange for
a New Note, or, if no interest has been paid or duly provided for on the Old
Note, from February 2, 2001, the date of issuance of the Old Note. Holders of
the Old Notes whose Old Notes are accepted for exchange will not receive
accrued interest on the Old Notes for any period from and after the last
interest payment date to which interest has been paid or duly provided for on
the Old Notes prior to the original issue date of the New Notes, or, if no
interest has been paid or duly provided for, will not receive any accrued
interest on the Old Notes. These holders will be deemed to have waived the
right to receive any interest on the Old Notes accrued from and after that
interest payment date, or, if no interest has been paid or fully provided for,
from and after February 2, 2001. Interest on the notes is payable semi-annually
in arrears on each February 1 and August 1, commencing on August 1, 2001.
Procedures For Tendering Old Notes
To tender in the Exchange Offer, a holder must complete, sign and date the
letter of transmittal, or a facsimile of the letter of transmittal, have the
signatures guaranteed if required by the letter of transmittal, and mail or
otherwise deliver the letter of transmittal or a facsimile, together with the
Old Notes and any other required documents, to the exchange agent. The exchange
agent must receive these documents at the address set forth below prior to 5:00
p.m., New York City time on the expiration date. Delivery of the Old Notes may
be made by book-entry transfer in accordance with the procedures described
below. Confirmation of book-entry transfers must be received by the exchange
agent prior to the expiration date.
By executing a letter of transmittal, each holder will make the
representations set forth below under the heading "--Resale of New Notes."
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The tender by a holder and the acceptance by us will constitute an agreement
between the holder and us in accordance with the terms subject to the
conditions set forth in this prospectus and in the letter of transmittal.
The method of delivery of Old Notes and the letter of transmittal and all
other required documents to the exchange agent is at the election and risk of
the holder. Instead of delivery by mail, it is recommended that holders use an
overnight or hand delivery service. In all cases, sufficient time should be
allowed to assure delivery to the exchange agent before the expiration date. No
letter of transmittal or notes should be sent to us. Holders may request their
brokers, dealers, commercial banks, trust companies or nominees to effect the
above transactions for them.
Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to
tender should contact the registered holder promptly and instruct the
registered holder to tender on the beneficial owner's behalf.
Signatures on a letter of transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an eligible institution (as defined below) unless
the Old Notes tendered:
. are signed by the registered holder, unless the holder has completed the
box entitled "special exchange instructions" or "special delivery
instructions" on the letter of transmittal; or
. are tendered for the account of an eligible institution.
In the event that signatures on a letter of transmittal or a notice of
withdrawal, as the case may be, are required to be guaranteed, the guarantee
must be by a member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc., a commercial bank or trust
company having an office or correspondent in the United States, or an "eligible
guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange
Act (an "eligible institution").
If a letter of transmittal is signed by a person other than the registered
holder of any Old Notes listed on the letter of transmittal, the Old Notes must
be endorsed or accompanied by a properly completed bond power, signed by the
registered holder as the registered holder's name appears on the Old Notes,
with the signature guaranteed by an eligible institution.
If a letter of transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or other acting in a fiduciary or representative capacity, the
persons should so indicate when signing. Unless waived by us, evidence
satisfactory to us of their authority to so act must be submitted with the
letter of transmittal.
All questions as to the validity, form, eligibility, including time or
receipt, acceptance of tendered Old Notes and withdrawal of tendered Old Notes
will be determined by us in our reasonable discretion. This determination will
be final and binding. We reserve the absolute right to reject any and all Old
Notes that are not properly tendered or any Old Notes our acceptance of which
would, in the opinion of our counsel, be unlawful. We also reserve the right to
waive any defects, irregularities or conditions of tender as to particular Old
Notes. Our interpretation of the terms and conditions of the Exchange Offer,
including the instructions in the letter of transmittal, will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Notes must be cured within the time period we
determine. Although we intend to notify holders of defects or irregularities
with respect to tenders of Old Notes, none of SBA, the exchange agent or any
other person will incur any liability for failure to give this notification.
Tenders of Old Notes will not be deemed to have been made until defects or
irregularities have been cured or waived. Any Old Notes received by the
exchange agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the exchange
agent to the tendering holders, unless otherwise provided in letter of
transmittal, as soon as practicable following the expiration date.
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Book-Entry Delivery Procedures
Promptly after the date of this prospectus, the exchange agent for the Old
Notes will establish accounts with respect to the Old Notes at DTC, (the "book-
entry transfer facility") for purposes of the Exchange Offer. Any financial
institution that is a participant in the book-entry transfer facility's systems
may make book-entry delivery of the Old Notes by causing the book-entry
transfer facility to transfer Old Notes into the exchange agent's account at
the book-entry transfer facility in accordance with the book-entry transfer
facility's procedures for transfers. Timely book-entry delivery of Old Notes
pursuant to the Exchange Offer, however, requires receipt of a book-entry
confirmation prior to the expiration date. In addition, to receive New Notes
for tendered Old Notes, the letter of transmittal, or a mutually signed
facsimile, together with any required signature guarantees and any other
required documents, or an agent's message in connection with a book-entry
transfer, must, in any case, be delivered or transmitted to and received by the
exchange agent at its address set forth under "--Exchange Agent" below prior to
the expiration date. Alternatively, the guaranteed delivery procedures
described below must be complied with. Tender will not be considered made until
the documents are received by the exchange agent. Delivery of documents to the
book-entry transfer facility does not constitute delivery to the exchange
agent.
Tender Of Existing Notes Held Through Book-Entry Transfer Facility
The exchange agent and the book-entry transfer facility have confirmed that
the Exchange Offer is eligible for the book-entry transfer facility's Automated
Tender Offer Program, or ATOP. Accordingly, participants in the book-entry
transfer facility's ATOP may, in lieu of physically completing and signing the
letter of transmittal and delivering it to the exchange agent, electronically
transmit their acceptance of the Exchange Offer by causing the book-entry
transfer facility to transfer Old Notes to the exchange agent in accordance
with the book-entry transfer facility's ATOP procedures for transfer. The book-
entry transfer facility will then send an agent's message to the exchange
agent.
The term "agent's message" means a message transmitted by a book-entry
transfer facility, received by exchange agent and forming part of the book-
entry confirmation, which states that:
. the book-entry transfer facility has received an expressed
acknowledgment from a participant in its ATOP that is tendering Old
Notes which are the subject of the book-entry confirmation;
. the participant has received and agrees to be bound by the terms of the
letter of transmittal or, in the case of an agent's message relating to
guaranteed delivery, the participant has received and agrees to be bound
by the notice of guaranteed delivery; and
. we may enforce the agreement against the participant.
Guaranteed Delivery Procedure
Holders who wish to tender their Old Notes and (1) whose Old Notes are not
immediately available, (2) who cannot deliver their Old Notes, the letter of
transmittal or any other required documents to the exchange agent or (3) who
cannot complete the procedures for book-entry transfer, prior to the expiration
date, may effect a tender if:
. the tender is made through an eligible institution;
. prior to the expiration date, the agent receives from the eligible
institution a properly completed and duly executed notice of guaranteed
delivery, by facsimile transmission, mail or hand delivery, setting
forth the name and address of the holder, the certificate number(s) of
the Old Notes and the principal amount of Old Notes tendered and
guaranteeing that, within three New York Stock Exchange trading days
after the date of execution, the letter of transmittal or facsimile
together with the certificate(s) representing the Old Notes or a book-
entry confirmation of the Old Notes into the exchange agent's account at
the book-entry transfer facility and any other documents required by the
letter of transmittal, will be deposited by the eligible institution
with the exchange agent; and
33
. a properly completed and executed letter of transmittal or facsimile, as
well as the certificate(s) representing all tendered Old Notes in proper
form for transfer or a book-entry confirmation transfer of the Old Notes
into the exchange agent's account at the book-entry transfer facility
and all other documents required by the letter of transmittal, are
received by the exchange agent within three New York Stock Exchange
trading days after the date of execution.
Upon request to the exchange agent, a notice of guaranteed delivery will be
sent to holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
Withdrawals Of Tenders
Except as otherwise provided in this prospectus, tenders of Old Notes may be
withdrawn at any time prior to the earlier of 5:00 p.m., New York City time on
the earlier of the expiration date or the date when all Old Notes have been
tendered.
To withdraw a tender of Old Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the exchange
agent at the address set forth below prior to 5:00 p.m., New York City time, on
the expiration date. Any notice of withdrawal must:
. specify the name of the person having deposited the Old Notes to be
withdrawn (the "depositor");
. identify the Old Notes to be withdrawn, including the certificates
number(s) and principal amount of the Old Notes, or, in the case of Old
Notes transferred by book-entry transfer, the name and number of the
account at the book-entry transfer facility to be credited;
. be signed by the holder in the same manner as the original signature on
the letter of transmittal by which the Old Notes were tendered,
including any required signature guarantees, or be accompanied by
documents of transfer sufficient to have the trustee or other registrar
register transfer of the Old Notes into the name of the person
withdrawing the tender; and
. specify the name in which any of the Old Notes are to be registered, if
different from that of the depositor.
All questions as to the validity, form and eligibility, including time or
receipt, of the notices will be determined by us. Our determination will be
final and binding on all parties. Any Old Notes so withdrawn will be deemed not
to have been validly tendered for purposes of the Exchange Offer and no New
Notes will be issued in exchange unless the Old Notes so withdrawn are validly
retendered. Any Old Notes which have been tendered but which are not accepted
for exchange will be returned to their holder without cost to the holder as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Old Notes may be retendered by following one
of the procedures described above under "--Procedures for Tendering Old Notes"
at any time prior to the expiration date.
Conditions To The Exchange Offer
Notwithstanding any other terms of the Exchange Offer, we will not be
required to accept for exchange, or exchange New Notes for, any Old Notes, and
may terminate the Exchange Offer before the acceptance of the Old Notes if, in
our reasonable judgment, the Exchange Offer would violate any law, statute,
rule or regulation or an interpretation thereof of the Staff of the Commission.
If we determine in our reasonable discretion that this condition is not
satisfied, we may:
. refuse to accept any Old Notes and return all tendered Old Notes to the
tendering holders;
. extend the Exchange Offer and retain all Old Notes tendered prior to the
expiration date, subject, however, to the rights of holders to withdraw
the Old Notes (see "--Withdrawals of Tender"); or
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. waive the unsatisfied condition with respect to the Exchange Offer and
accept all validly tendered Old Notes which have not been withdrawn. If
the waiver constitutes a material change to the Exchange Offer, we will
promptly disclose the waiver by means of a prospectus supplement that
will be distributed to the registered holders, and we will extend the
Exchange Offer for a period of five to ten business days, depending upon
the significance of the waiver and the manner of disclosure to the
registered holders, if the Exchange Offer would otherwise expire during
that five to ten business-day period.
Exchange Agent
State Street Bank and Trust Company has been appointed as the exchange agent
for the Exchange Offer of the Old Notes. The executed letter of transmittal
should be directed to the exchange agent at the address set forth below.
Questions and requests for assistance, requests for additional copies of this
prospectus or of the letter of transmittal and requests for notices of
guaranteed delivery should be directed to the exchange agent, addressed as
follows:
By mail or by hand: State Street Bank and Trust Company
2 Avenue de Lafayette
Boston, MA 02111
Attention: Meaghan Haight, Corporate Trust Department
By Facsimile: (617) 662-1452
Confirm Facsimile by Telephone: (617) 662-1603
Delivery of a letter of transmittal to an address other than that for the
exchange agent as set forth above or transmission of instructions via facsimile
other than as set forth above does not constitute a valid delivery of a letter
of transmittal.
Fees And Expenses
We will not make any payment to brokers, dealers or others for soliciting
acceptances of the Exchange Offer.
Transfer Taxes
Holders who tender their Old Notes for exchange generally will not be
obligated to pay any transfer tax in connection with the exchange. However,
holders who instruct us to register New Notes in the name of a person other
than the registered tendering holders, or request that Old Notes not properly
tendered, withdrawn or not accepted in the Exchange Offer be returned to a
person other than the registered tendering holder, will be responsible for the
payment of any applicable transfer tax.
Accounting Treatment
The New Notes will be recorded at the same carrying value as the Old Notes.
This is the aggregate principal amount of the Old Notes, as reflected in our
accounting records on the date of exchange. Accordingly, no gain or loss for
accounting purposes will be recognized by us in connection with the Exchange
Offer. The expenses of the Exchange Offer will be amortized over the term of
the notes.
Appraisal Rights
Holders of Old Notes will not have dissenters' rights or appraisal rights in
connection with the Exchange Offer.
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Resale Of New Notes
The New Notes are being offered to satisfy our obligations contained in the
registration rights agreement. We are making the Exchange Offer in reliance on
the position of the Staff of the Commission as set forth in the Exxon Capital
No-Action Letter, the Morgan Stanley No-Action Letter, the Shearman & Sterling
No-Action Letter, and other interpretive letters addressed to third parties in
other transactions. However, we have not sought our own interpretive letter
addressing these matters and there can be no assurance that the Staff would
make a similar determination with respect to the Exchange Offer as it has in
those interpretive letters to third parties. Based on these interpretations by
the Staff, and subject to the two immediately following sentences, we believe
that New Notes issued pursuant to this Exchange Offer in exchange for Old Notes
may be offered for resale, resold and otherwise transferred by holders, other
than a holder who is a broker-dealer, without further compliance with the
registration and prospectus delivery requirements of the Securities Act,
provided that:
. the New Notes are acquired in the ordinary course of the holder's
business; and
. the holder is not participating, and has no arrangement or understanding
with any person to participate, in a distribution within the meaning of
the Securities Act of the New Notes.
However, any holder who:
. is an "affiliate" of us, within the meaning of Rule 405 under the
Securities Act;
. does not acquire New Notes in the ordinary course of its business;
. intends to participate in the Exchange Offer for the purpose of
distributing New Notes; or
. is a broker-dealer who purchased Old Notes directly from us,
will not be able to rely on the interpretations of the Staff set forth in the
above-mentioned interpretive letters; will not be permitted or entitled to
tender Old Notes in the Exchange Offer; and must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any sale or other transfer of Old Notes unless the sale is made pursuant to an
exemption from those requirements.
In addition, as described below, if any broker-dealer holds Old Notes
acquired for its own account as a result of market-making or other trading
activities and exchanges the Old Notes for New Notes (a "participating broker-
dealer"), the participating broker-dealer may be deemed to be a statutory
"underwriter" within the meaning of the Securities Act and must deliver a
prospectus meeting the requirements of the Securities Act in connection with
any resales of New Notes. See "Plan of Distribution."
Each holder who wishes to exchange Old Notes for New Notes in the Exchange
Offer will be required to represent that:
. it is not an affiliate of us;
. any New Notes to be received by it are being acquired in the ordinary
course of its business; and
. it has no arrangement or understanding with any person to participate in
a distribution, within the meaning of the Securities Act, of New Notes.
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must:
. acknowledge that it acquired the Old Notes for its own account as a
result of market-making activities or other trading activities, and not
directly from us; and
. must agree that it will deliver a prospectus meeting the requirements of
the Securities Act in connection with any resale of New Notes.
The letter of transmittal states that by so acknowledging and by delivering
a prospectus, a participating broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
36
Based on the position taken by the Staff in the interpretive letters referred
to above, we believe that participating broker-dealers may fulfill their
prospectus delivery requirements with respect to the New Notes received upon
exchange of Old Notes with a prospectus meeting the requirements of the
Securities Act, which may be the prospectus prepared for an Exchange Offer so
long as it contains a description of the plan of distribution with respect to
the resale of New Notes. Accordingly, this prospectus, as it may be amended or
supplemented from time to time, may be used by a participating broker-dealer
during the period referred to below in connection with the resales of New Notes
received in exchange for Old Notes where the Old Notes were acquired by the
participating broker-dealer for its own account as a result of market-making or
other trading activities.
Subject to provisions set forth in the registration rights agreement, we
shall use our best efforts to:
. keep the Exchange Offer Registration Statement continuously effective,
supplemented and amended to the extent necessary to ensure that it is
available for resales of New Notes acquired by broker-dealers for their
own accounts as a result of market-making activities or other trading
activities; and
. ensure that the Exchange Offer Registration Statement conforms with the
requirements of the registration rights agreement, the Securities Act
and the policies, rules and regulations of the Commission as announced
from time to time, for a period of 180 days from the date on which the
Exchange Offer Registration Statement is declared effective.
Any participating broker-dealer who is an affiliate of us may not rely on
the interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction.
Each participating broker-dealer who surrenders Old Notes pursuant to the
Exchange Offer will be deemed to have agreed, by execution of a letter of
transmittal, that, upon receipt of notice from us of the occurrence of any
event or the discovery of any fact which makes any statement contained or
incorporated by reference in this prospectus untrue in any material respect or
which causes this prospectus to omit to state a material fact necessary in
order to make the statements contained or incorporated by reference herein, in
light of the circumstances under which they were made, not misleading or of the
occurrence of other events specified in the registration rights agreement, the
participating broker-dealer will suspend the sale of New Notes pursuant to this
prospectus until we have amended or supplemented this prospectus to correct the
misstatement or omission and have furnished copies of the amended or
supplemented prospectus to the participating broker-dealer or we have given
notice that the sale of the New Notes may be resumed, as the case may be.
Consequences Of Failure To Exchange Old Notes
Any Old Notes tendered and exchanged in the Exchange Offer will reduce the
aggregate principal amount of Old Notes outstanding. Following the consummation
of the Exchange Offer, holders who did not tender their Old Notes generally
will not have any further registration rights under the registration rights
agreement, and these Old Notes will continue to be subject to restrictions on
transfer. Accordingly, the liquidity of the market for the Old Notes could be
adversely affected. The Old Notes are currently eligible for sale under Rule
144A through the Portal Market. Because we anticipate that most holders will
elect to exchange their Old Notes for New Notes due to the absence of most
restrictions on the resale of New Notes, we anticipate that the liquidity of
the market for any Old Notes remaining outstanding after the Exchange Offer may
be substantially limited.
As a result of the making of the Exchange Offer, we will have fulfilled our
obligations under the registration rights agreement, and holders who do not
tender their Old Notes generally will not have any further registration rights
or rights to receive liquidated damages specified in the registration rights
agreement for our failure to register the New Notes.
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The Old Notes that are not exchanged for New Notes will remain restricted
securities. Accordingly, the Old Notes may be resold only:
. to SBA or one of its subsidiaries;
. to a qualified institutional buyer;
. to an institutional accredited investor;
. to a party outside the United States under Regulation S under the
Securities Act;
. under an exemption from registration provided by Rule 144 under the
Securities Act; or
. under an effective registration statement.
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DESCRIPTION OF THE NOTES
General
The Old Notes were and the New Notes will be issued under the Indenture
dated February 2, 2001 between us and State Street Bank and Trust Company as
trustee (the "Indenture"). The term "Notes" refers to the Old Notes and the New
Notes. The statements under this caption relating to the Notes and the
Indenture are summaries and are not complete. In addition, they are subject to,
and are qualified in their entirety by reference to, all the provisions of the
Indenture, including the definitions of various terms in the Indenture. The
Indenture is by its terms subject to and governed by the Trust Indenture Act of
1939. Where reference is made to particular provisions of the Indenture or to
defined terms not defined in this prospectus, the provisions or defined terms
are incorporated by reference to this prospectus. Copies of the Indenture
referred to below are available for review at the corporate office of the
trustee and may also be obtained from us upon request.
Brief Description of the Securities
The Notes are:
. our senior unsecured obligations;
. senior in right of payment to any of our future subordinated
Indebtedness;
. pari passu in right of payment to our existing and future unsecured
Indebtedness that is not by its terms expressly subordinated to the
Notes; and
. effectively junior in right of payment to our existing and future
secured Indebtedness to the extent of the value of the collateral
securing that Indebtedness.
The Notes are not guaranteed by any of our Subsidiaries.
Our operations are conducted through our Subsidiaries and, therefore, we are
dependent upon the cash flow of our Subsidiaries to meet our obligations,
including our obligations under the Notes. Our Subsidiaries are not guarantors
of the Notes and are separate entities with no obligation to make payments on
the Notes or to make funds available therefor. The Notes are effectively
subordinated to all Indebtedness (including all obligations under any senior
credit facility obtained in the future) and other liabilities and commitments
(including trade payables and lease obligations) of our Subsidiaries. Our right
to receive assets of any of our Subsidiaries upon such Subsidiary's liquidation
or reorganization (and the consequent right of the Holders of the Notes to
participate in those assets) is effectively subordinated to the claims of that
Subsidiary's creditors, except to the extent that we are ourselves recognized
as a creditor of such Subsidiary, in which case our claims would still be
subordinate to any security in the assets of such Subsidiary and any
indebtedness of such Subsidiary senior to that held by us. We cannot assure you
that, if a Default or Event of Default occurs, we will have sufficient cash or
other assets available to meet our obligations, especially after repayment by
our Subsidiaries of their obligations. For other information relating to us and
our Subsidiaries and the structural subordination of the Notes to indebtedness
and other obligations of such Subsidiaries, see "Risk Factors--The notes are
structurally subordinate to the debt of our subsidiaries, including any senior
credit facility."
As of the date we issued the Old Notes, all of our existing subsidiaries
were "Restricted Subsidiaries" and bound by the covenants contained in the
Indenture. However, under certain circumstances, we will be permitted to
designate our Subsidiaries as "Unrestricted Subsidiaries." Our Unrestricted
Subsidiaries will not be subject to the restrictive covenants in the Indenture.
At December 31, 2000, as adjusted for the offering of the Old Notes and
giving effect to the application of the proceeds therefrom, we would have had
approximately $709.2 million of Indebtedness outstanding (including the Notes),
none of which would have been secured. The Indenture permits certain of our
Subsidiaries to incur additional amounts of Indebtedness, all of which would be
effectively senior to the Notes.
39
Principal, Maturity and Interest
We will issue New Notes with a maximum aggregate principal amount of $500.0
million. The Notes will mature on February 1, 2009. We will issue the New Notes
in denominations of $1,000 and integral multiples of $1,000.
Interest on the Notes will accrue at the rate of 10 1/4% per annum and will
be payable semi-annually in arrears on each February 1 and August 1, commencing
on August 1, 2001, to Holders of record on the immediately preceding January 15
or July 15, respectively. The registered Holder of a Note will be treated as
the owner of the Note for all purposes. Only registered Holders will have
rights under the Indenture.
Interest on the Notes will accrue from the date of original issuance or, if
interest has been paid, from the date it was most recently paid. Interest will
be computed on the basis of a 360-day year comprised of twelve 30-day months.
Methods of Receiving Payments on the Notes
If a Holder has given wire transfer instructions to us, we will pay all
principal, interest and premium, if any, on that Holder's Notes in accordance
with those instructions. All other payments on Notes will be made at the office
or agency of the paying agent and registrar within the City and State of New
York unless we elect to make interest payments by check mailed to the Holders
at their address set forth in the register of Holders.
Paying Agent and Registrar for the Notes
The Trustee will initially act as paying agent and registrar. We may change
the paying agent or registrar without prior notice to the Holders of the Notes,
and we or any of our Subsidiaries may act as paying agent or registrar.
Transfer and Exchange
A Holder may transfer or exchange Notes in accordance with the Indenture.
The registrar and the Trustee may require a Holder to furnish appropriate
endorsements and transfer documents in connection with a transfer of Notes.
Holders will be required to pay all taxes due on transfer. We are not required
to transfer or exchange any note selected for redemption. Also, we are not
required to transfer or exchange any note for a period of 15 days before a
selection of Notes to be redeemed.
Optional Redemption
Except as described below, the Notes will not be redeemable at our option
prior to February 1, 2005. Thereafter, the Notes will be subject to redemption
at any time at our option, in whole or in part, upon not less than 30 nor more
than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest thereon, if
any, to the applicable redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date), if redeemed during the twelve-month period beginning on
February 1 of the years indicated below:
Year Percentage
---- ----------
2005.............................................................. 105.125%
2006.............................................................. 103.417%
2007.............................................................. 101.708%
2008 and thereafter............................................... 100.000%
At any time prior to February 1, 2004, we may on any one or more occasions
redeem up to 35% of the aggregate principal amount of Notes issued under the
Indenture at a redemption price of 110.250% of the
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principal amount thereof on the redemption date with the net cash proceeds of
one or more Public Equity Offerings and/or Strategic Equity Investments;
provided that (1) at least 65% of the aggregate principal amount of Notes
issued under the Indenture remains outstanding immediately after the
occurrence of such redemption (excluding Notes held by us or any of our
Subsidiaries) and (2), that such redemption shall occur within 60 days of the
date of the closing of such Public Equity Offering and/or Strategic Equity
Investment.
Selection and Notice
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which
the Notes are listed, or, if the Notes are not so listed on a pro rata basis,
provided that no Notes of $1,000 or less shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than
60 days before the redemption date to each Holder of Notes to be redeemed at
its registered address. Notices of redemption may not be conditional. If any
Note is to be redeemed in part only, the notice of redemption that relates to
such Note shall state the portion of the principal amount thereof to be
redeemed. A new Note in principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Note. Notes called for redemption become due on the date fixed
for redemption. On and after the redemption date, interest ceases to accrue on
Notes or portions of them called for redemption so long as we have deposited
with the Paying Agent funds in satisfaction at the applicable redemption price
pursuant to the Indenture.
Mandatory Redemption
We are not required to make mandatory redemption or sinking fund payments
with respect to the Notes.
Purchase at the Option of Holders
Change of Control
Upon the occurrence of a Change of Control, each Holder of Notes will have
the right to require the Company to purchase all or any part (equal to $1,000
or an integral multiple thereof) of such Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at an offer price in cash
equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest thereon, if any (subject to the right of Holders of record on
the relevant record date to receive interest due on the relevant interest
payment date), to the date of purchase (the "Change of Control Payment").
Within 30 days following any Change of Control, the Company will mail a notice
to each Holder describing the transaction or transactions that constitute the
Change of Control and offering to purchase Notes on the date specified in such
notice, which date shall be no earlier than 30 days and no later than 60 days
from the date such notice is mailed (the "Change of Control Payment Date"),
pursuant to the procedures required by the Indenture and described in such
notice.
On the Change of Control Payment Date, the Company will, to the extent
lawful:
(1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer,
(2) deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all Notes or portions thereof so tendered,
and
(3) deliver or cause to be delivered to the Trustee the Notes so
accepted together with an Officers' Certificate stating the aggregate
principal amount of Notes or portions thereof being purchased by the
Company.
The Paying Agent will promptly mail to each Holder of Notes so tendered the
Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry)
41
to each Holder a new Note equal in principal amount to any unpurchased portion
of the Notes surrendered, if any; provided that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof.
We will comply, to the extent applicable, with the requirements of Section
14(e) of the Exchange Act and any other securities laws or regulations
applicable to any Change of Control Offer. To the extent that the provisions of
any such securities laws or securities regulations conflict with the provisions
of the covenant described above, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under the covenant described above by virtue thereof.
The Change of Control purchase feature is a result of negotiations between
the Company and the Initial Purchasers. We have 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 Indenture, but that
could increase the amount of Indebtedness outstanding at such time or otherwise
affect the Company's capital structure. Restrictions on the ability of the
Company to incur additional Indebtedness are contained in the covenants
described under "--Certain Covenants--Incurrence of Indebtedness and Issuance
of Preferred Stock," "--Certain Covenants--Liens" and "--Certain Covenants--
Sale and Leaseback Transactions." Such restrictions can be waived only with the
consent of the Holders of a majority in principal amount of the Notes then
outstanding. Except for the limitations contained in such covenants, however,
the Indenture will not contain any covenants or provisions that may afford
Holders of the Notes protection in the event of certain highly leveraged
transactions.
Any Senior Credit Facility would likely limit the Company's access to the
cash flow of its Subsidiaries and, therefore, restrict the Company's ability to
purchase any Notes. Any Senior Credit Facility would likely also provide that
the occurrence of certain change of control events with respect to the Company
will constitute a default thereunder. In the event that a Change of Control
occurs at a time when the Company's Subsidiaries are prohibited from making
distributions to the Company to purchase Notes, the Company could cause its
Subsidiaries to seek the consent of the lenders under any senior credit
facility we may obtain in the future to allow such distributions 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 remain prohibited from purchasing Notes. In such case, the Company's
failure to purchase tendered Notes would constitute an Event of Default under
the Indenture. The March 1998 Senior Discount Note Indenture, evidencing the
Company's Senior Discount Notes due 2008 ("2008 Notes"), also requires the
Company to offer to repurchase the 2008 Notes on a Change of Control. Future
indebtedness of the Company and its Subsidiaries may contain prohibitions on
the occurrence of certain events that would constitute a Change of Control or
require such indebtedness to be purchased upon a Change of Control. Moreover,
the exercise by the Holders of their right to require the Company to purchase
the Notes could cause a default under such indebtedness, even if the Change of
Control itself does not, due to the financial effect of such purchase on the
Company. The Company's ability to pay cash to the Holders of Notes following
the occurrence of a Change of Control may also be limited by the Company's then
existing financial resources, including its ability to access the cash flow of
its Subsidiaries. See "Risk Factors--We may not be able to purchase your notes
upon a change of control."
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set
forth in the Indenture applicable to a Change of Control Offer made by the
Company and purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer. The provisions under the Indenture relative to the
Company's obligation to make an offer to repurchase the Notes as a result of a
Change of Control may be waived or modified only with the written consent of
the Holders of a majority in principal amount of the Notes then outstanding.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Company and its Restricted Subsidiaries taken
42
as a whole. 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. Accordingly, the ability of a Holder of Notes to
require the Company to purchase such Notes as a result of a sale, lease,
transfer, conveyance or other disposition of less than all of the assets of the
Company and its Subsidiaries taken as a whole to another Person or group may be
uncertain.
Asset Sales
The Company will not, and will not permit any of its Restricted Subsidiaries
to, consummate an Asset Sale unless:
(1) the Company (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the
fair market value (evidenced by a resolution of the Board of Directors set
forth in an Officers' Certificate delivered to the Trustee) of the assets
or Equity Interests issued or sold or otherwise disposed of; and
(2) at least 75% of the consideration therefor received by the Company
or such Restricted Subsidiary is in the form of (a) cash or Cash
Equivalents, (b) Tower Assets or (c) any combination of the foregoing.
For purposes of this provision, the following shall be deemed to be
cash:
(A) the amount of any liabilities (as shown on the Company's or such
Restricted Subsidiary's most recent balance sheet) of the Company or
any Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or any
guarantee thereof) that are assumed by the transferee of any such
assets pursuant to a customary novation agreement that releases the
Company or such Restricted Subsidiary from further liability; and
(B) the amount of any securities, notes or other obligations
received by the Company or any such Restricted Subsidiary from such
transferee that are converted by the Company or such Restricted
Subsidiary into cash within 20 days of the applicable Asset Sale (to
the extent of the cash received) shall be deemed to be cash for
purposes of this provision.
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
the Company or the applicable Restricted Subsidiary may apply such Net Proceeds
to:
(a) reduce (which reduction may be temporary) Indebtedness under a
Credit Facility;
(b) reduce other Indebtedness of any of the Company's Restricted
Subsidiaries;
(c) acquire all or substantially all the assets of a Permitted Business;
(d) acquire Voting Stock of a Permitted Business from a Person that is
not a Subsidiary of the Company; provided, that, after giving effect
thereto, the Company or its Restricted Subsidiary owns a majority of such
Voting Stock; or
(e) make a capital expenditure or acquire other long-term assets that
are used or useful in a Permitted Business.
Pending the final application of any such Net Proceeds, the Company may
invest such Net Proceeds in any manner that is not prohibited by the Indenture.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in clauses (a) through (e) immediately above will be deemed to
constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds
exceeds $10 million, the Company will be required to make an offer to all
Holders of Notes and all Holders of other senior Indebtedness of the Company
containing provisions similar to those set forth in the Indenture with respect
to offers to purchase or redeem with the proceeds of sales of assets (an "Asset
Sale Offer") to purchase, on a pro rata basis, the maximum principal amount (or
accreted value, as applicable) of
43
Notes and such other senior Indebtedness of the Company that may be purchased
out of the Excess Proceeds, at an offer price in cash in an amount equal to
100% of the principal amount thereof plus accrued and unpaid interest thereon,
if any, to the date of purchase (subject to the right of Holders of record on
the relevant record date to receive interest due on the relevant interest
payment date), in accordance with the procedures set forth in the Indenture and
such other senior Indebtedness of the Company.
To the extent that any Excess Proceeds remain after consummation of an Asset
Sale Offer, the Company may use such Excess Proceeds for any purpose not
otherwise prohibited by the Indenture. If the aggregate principal amount of
Notes and such other senior Indebtedness of the Company tendered into such
Asset Sale Offer surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes and such other senior Indebtedness
to be purchased on a pro rata basis. Upon completion of such offer to purchase,
the amount of Excess Proceeds shall be reset at zero.
Certain Covenants
Restricted Payments
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or
distribution on account of the Company's or any of its Restricted
Subsidiaries' Equity Interests (including, without limitation, any payment
in connection with any merger or consolidation involving the Company or any
of its Restricted Subsidiaries) or to the direct or indirect Holders of the
Company's or any of its Restricted Subsidiaries' Equity Interests in their
capacity as such (other than dividends or distributions payable (A) in
Qualified Equity Interests or (B) to the Company or a Restricted Subsidiary
of the Company);
(2) purchase, redeem or otherwise acquire or retire for value (including
without limitation, in connection with any merger or consolidation
involving the Company) any Equity Interests of the Company;
(3) designate any Restricted Subsidiary as an Unrestricted Subsidiary;
(4) make any payment on or with respect to, or purchase, redeem, defease
or otherwise acquire or retire for value any Indebtedness that is
subordinated to the Notes, except a payment of interest or principal at
Stated Maturity (other than payments to the Company or payments by a
Restricted Subsidiary of the Company to the Company or to another
Restricted Subsidiary of the Company); or
(5) make any Restricted Investment (all such payments and other actions
set forth in clauses (1) through (5) being collectively referred to as
"Restricted Payments"), unless, at the time of and after giving effect to
such Restricted Payment:
(a) no Default shall have occurred and be continuing or would occur
as a consequence thereof; and
(b) the Company would have been permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Debt to Adjusted Consolidated
Cash Flow Ratio test set forth in the first paragraph of the covenant
described below under the caption "--Incurrence of Indebtedness and
Issuance of Preferred Stock"; provided that the Company and its
Restricted Subsidiaries will not be required to comply with this clause
(b) in order to make any Restricted Investment and
(c) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by the Company and its Restricted
Subsidiaries after the date of the March 1998 Senior Discount Note
Indenture (excluding Restricted Payments permitted by clauses (2) and
(3) of the next succeeding paragraph), is less than the sum, without
duplication, of:
(1) 100% of the Consolidated Cash Flow of the Company for the
period (taken as one accounting period) from the beginning of the
fiscal quarter during which the May 1998 Senior
44
Discount Note Indenture was executed to the end of the Company's
most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or,
if the Consolidated Cash Flow for such period is a deficit, less
100% of the deficit), less 1.75 times the Consolidated Interest
Expense of the Company since the beginning of the fiscal quarter
during which the May 1998 Senior Discount Note Indenture was
executed to the end of the Company's most recently ended fiscal
quarter for which internal financial statements are available at the
time of such Restricted Payment; plus
(2) (A) 100% of the aggregate net cash proceeds plus (B) 70% of
the aggregate value, as reflected on the Company's balance sheet in
accordance with GAAP using purchase accounting, of any Qualified
Proceeds, in each case as of the date the Company's Equity Interests
were issued, sold or exchanged therefor received by the Company
(from persons other than Subsidiaries) since the beginning of the
fiscal quarter during which the March 1998 Senior Discount Note
Indenture was executed as a contribution to its common equity
capital or from the issue and sale of Qualified Equity Interests
(except to the extent such net cash proceeds are used to incur new
indebtedness outstanding pursuant to clause (10) of the second
paragraph of the covenant described below under the caption "--
Incurrence of Indebtedness and Issuance of Preferred Stock") or from
the issue or sale (whether before or after the beginning of the
fiscal quarter during which the March 1998 Senior Discount Note
Indenture was executed) (other than to a Subsidiary of the Company)
of Disqualified Stock or debt securities of the Company that have
been converted into Qualified Equity Interests sold to or held by a
Subsidiary of the Company (provided that any net cash proceeds that
are used pursuant to the second paragraph under "Optional
Redemption" shall not be so included); plus
(3) to the extent that any Unrestricted Subsidiary of the Company
is redesignated as or becomes a Restricted Subsidiary after the
Issue Date; the lesser of:
(A) the fair market value of the Company's Investments in
such Subsidiaries as of the date they are designated or become
Restricted Subsidiaries, and
(B) the sum of:
(x) the fair market value of the Company's Investments in such
Subsidiaries as of the date on which such Subsidiaries were
originally designated as Unrestricted Subsidiaries, and
(y) the amount of any Investments made in such Subsidiaries
subsequent to such designation (and treated as Restricted Payments)
by the Company or any Restricted Subsidiary; plus
(4) to the extent not included in the Consolidated Cash Flow
referred to in clause (1) and to the extent that any Restricted
Investment that was made after the Issue Date is sold for cash or
otherwise liquidated or repaid for cash, the lesser of:
(A) the cash return of capital with respect to the Restricted
Investment (less the cost of disposition, if any), and
(B) the initial amount of the Restricted Investment; plus
(5) 100% of any other dividends or other distributions received
by the Company or a Restricted Subsidiary of the Company since the
Issue Date from an Unrestricted Subsidiary of the Company to the
extent that such dividends were not otherwise included in
Consolidated Net Income of the Company for such period.
The foregoing provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of the Indenture;
45
(2) the making of any Investment or the redemption, repurchase,
retirement, defeasance or other acquisition of any subordinated
Indebtedness or Equity Interests of the Company or its Restricted
Subsidiaries in exchange for, or out of the net cash proceeds, to the
extent of the net cash proceeds received by the Company from the sale since
the Issue Date, (other than to a Subsidiary of the Company) of, any
Qualified Equity Interests; provided that such net cash proceeds are not
used to incur new Indebtedness pursuant to clause (10) of the second
paragraph of the covenant described below under the caption "--Incurrence
of Indebtedness and Issuance of Preferred Stock" or pursuant to the second
paragraph under "Optional Redemption"; and provided further that, in each
such case, the amount of any such net cash proceeds that are so utilized
shall be excluded from clause (c)(2) of the preceding paragraph;
(3) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness; provided that such net cash proceeds
are not used to incur new Indebtedness pursuant to clause (10) of the
second paragraph of the covenant described below under the caption "--
Incurrence of Indebtedness and Issuance of Preferred Stock" or pursuant to
the second paragraph under "Optional Redemption"; and provided further
that, in each such case, the amount of any such net cash proceeds that are
so utilized shall be excluded from clause (c)(2) of the preceding
paragraph;
(4) the repurchase, redemption or other acquisition or retirement for
value of Equity Interests of the Company or any Restricted Subsidiary of
the Company held by any member of the Company's (or any of its Restricted
Subsidiaries') management; provided that the aggregate amount expended
pursuant to this clause (4) shall not exceed $500,000 in any twelve-month
period;
(5) the repurchase of Equity Interests of the Company that may be deemed
to occur upon the exercise of options to acquire capital stock of the
Company if such Equity Interests represent a portion of the exercise price
of such options; or
(6) cash payments, in lieu of fractional shares issuable as dividends on
Equity Interests of the Company in an amount, when taken together with all
other cash payments made pursuant to this clause (6) since the date of the
Indenture, not to exceed $500,000.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such Subsidiary, after giving effect to such
designation, would meet the requirements of the definition of "Unrestricted
Subsidiary." The Company will not, and will not permit any of its Subsidiaries
to, enter into, or suffer to exist, any transaction or arrangement, with a
Subsidiary that is a Restricted Subsidiary that would be inconsistent with or
violate the terms set forth in the definition of "Unrestricted Subsidiary."
The amount of all Restricted Payments (other than cash), including the
amount of the Restricted Payment that will be deemed to occur upon the
designation of a Subsidiary as an Unrestricted Subsidiary, shall be the fair
market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or the
applicable Restricted Subsidiary, or of the Company's proportionate interest in
the Subsidiary so to be designated as the case may be, pursuant to the
Restricted Payment.
Incurrence of Indebtedness and Issuance of Preferred Stock
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly, or indirectly, create, incur, issue, assume, guarantee or
otherwise become directly or indirectly liable, contingently or otherwise, with
respect to (collectively, "incur") any Indebtedness (including Acquired Debt)
and the Company will not issue any Disqualified Stock and will not permit any
of its Restricted Subsidiaries to issue any shares of preferred stock;
provided, however, that the Company may incur Indebtedness (including Acquired
Debt) or issue shares of Disqualified Stock and its Restricted Subsidiaries may
incur Indebtedness or issue preferred stock if, in each case, (1) no Default
shall have occurred and be continuing or would occur as a consequence thereof
and (2) the Company's Debt to Adjusted Consolidated Cash Flow Ratio at the time
of incurrence of
46
such Indebtedness or the issuance of such Disqualified Stock, after giving pro
forma effect to such incurrence or issuance as of such date and to the use of
proceeds therefrom would have been no greater than 7.0 to 1.0.
The first paragraph of this covenant will not apply to the incurrence of any
of the following items of Indebtedness (collectively, "Permitted Debt") if no
Default shall have occurred and be continuing or would occur as a consequence
thereof:
(1) the incurrence by the Company or any of its Restricted Subsidiaries
of Indebtedness under one or more Credit Facilities or through the issuance
of Seller Paper in an aggregate principal amount (with letters of credit
being deemed to have an aggregate principal amount equal to the maximum
potential liability of the Company and its Restricted Subsidiaries
thereunder) at any one time outstanding not to exceed the greater of (A)
$300.0 million or (B) the product of $150,000 times the number of Completed
Towers on the date of such occurrence less, in either such case, the
aggregate amount of commitment reductions under Credit Facilities resulting
from the application of proceeds of Asset Sales since the Issue Date;
provided, however, that the aggregate principal amount of Seller Paper at
any one time outstanding under this clause (1) shall not exceed $50.0
million;
(2) the incurrence by the Company and its Restricted Subsidiaries of the
Existing Indebtedness;
(3) the incurrence by the Company of Indebtedness represented by the
Notes issued on the Issue Date, and the New Notes;
(4) the incurrence by the Company or any of its Restricted Subsidiaries
of Indebtedness represented by Capital Lease Obligations, mortgage
financings or purchase money obligations, in each case, incurred for the
purpose of financing all or any part of the purchase price or cost of
construction or improvement of property, plant or equipment used in the
business of the Company or such Restricted Subsidiary, in an aggregate
principal amount, including all Permitted Refinancing Indebtedness incurred
to refund, refinance or replace any other Indebtedness incurred pursuant to
this clause (4), not to exceed $10.0 million at any one time outstanding;
(5) the incurrence by the Company or any of its Restricted Subsidiaries
of Permitted Refinancing Indebtedness in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund,
Indebtedness (other than intercompany Indebtedness) that was permitted by
the Indenture to be incurred under the first paragraph hereof or clause (2)
or (3) or this clause (5) of this paragraph;
(6) the incurrence by the Company or any of its Restricted Subsidiaries
of intercompany Indebtedness or intercompany preferred stock between or
among the Company and any of its Restricted Subsidiaries; provided,
however, that (1) if the Company is the obligor on such Indebtedness, such
Indebtedness is expressly subordinated to the prior payment in full in cash
of all Obligations with respect to the Notes and (2)(A) any subsequent
issuance or transfer of Equity Interests that results in any such
Indebtedness or preferred stock being held by a Person other than the
Company or a Restricted Subsidiary and (B) any sale or other transfer of
any such Indebtedness or preferred stock to a Person that is not either the
Company or a Restricted Subsidiary shall be deemed, in each case, to
constitute an incurrence of such Indebtedness or preferred stock by the
Company or such Restricted Subsidiary, as the case may be;
(7) the incurrence by the Company or any of its Restricted Subsidiaries
of Hedging Obligations that are incurred for the purpose of fixing or
hedging interest rate risk with respect to any floating rate Indebtedness
that is permitted by the terms of the Indenture to be outstanding or
currency exchange risk or otherwise entered into for bona fide purposes
designed to protect against interest rate or currency exchange risk and not
for speculative purposes;
(8) the guarantee by the Company or any of its Restricted Subsidiaries
of Indebtedness of the Company or a Restricted Subsidiary of the Company
that was permitted to be incurred by another provision of the Indenture;
47
(9) the incurrence by the Company or any of its Restricted Subsidiaries
of Acquired Debt in connection with the acquisition of assets or a new
Subsidiary and the incurrence by the Company's Restricted Subsidiaries of
Indebtedness as a result of the designation of an Unrestricted Subsidiary
as a Restricted Subsidiary; provided that, in the case of any such
incurrence of Acquired Debt, such Acquired Debt was incurred by the prior
owner of such assets or such Restricted Subsidiary prior to such
acquisition by the Company or one of its Restricted Subsidiaries and was
not incurred in connection with, or in contemplation of, such acquisition
by the Company or one of its Restricted Subsidiaries; and provided further
that, in the case of any incurrence pursuant to this clause (9), as a
result of such acquisition the Company's Debt to Adjusted Consolidated Cash
Flow Ratio at the time of incurrence of such Acquired Debt, after giving
pro forma effect to such incurrence as if the same had occurred at the
beginning of the most recently ended four full fiscal quarter period for
the Company for which internal financial statements are available, would
have been less than the Company's Debt to Adjusted Consolidated Cash Flow
Ratio for the same period without giving pro forma effect to such
incurrence;
(10) the incurrence by the Company of Indebtedness not to exceed, at any
one time outstanding, the sum of (A) 2.0 times the aggregate net cash
proceeds plus (B) 1.0 times the fair market value of non-cash proceeds
(evidenced by a resolution of the Board of Directors of the Company set
forth in an Officers' Certificate delivered to the Trustee) from the
issuance and sale, other than to a Subsidiary, of Qualified Equity
Interests of the Company since the beginning of the fiscal quarter during
which the March 1998 Senior Discount Note Indenture was executed (less the
amount of such proceeds used to make Restricted Payments as provided in
clause (c)(2) of the first paragraph or clause (4) of the second paragraph
of the covenant described above under the caption "--Restricted Payments");
(11) the issuance by Restricted Subsidiaries of Permitted Subsidiary
Equity Interests; and
(12) the incurrence by the Company or any of its Restricted Subsidiaries
of additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding not to exceed $10.0 million.
(1) The Company will not incur any Indebtedness that is contractually
subordinated in right of payment to any other Indebtedness of the Company
unless such Indebtedness is also contractually subordinated in right of payment
to the Notes on substantially identical terms; provided, however, that no
Indebtedness of the Company shall be deemed to be contractually subordinated in
right of payment to any other Indebtedness of the Company solely by virtue of
being unsecured; and (2) the Company will not permit any of its Unrestricted
Subsidiaries to incur any Indebtedness other than Non-Recourse Debt; and (3)
Restricted Subsidiaries may not issue or sell, and the Company may not permit
any Restricted Subsidiary to have outstanding, any Equity Interests (other than
(x) Equity Interests held by the Company or its Restricted Subsidiaries or (y)
Permitted Subsidiary Equity Interests).
For purposes of determining compliance with this covenant, in the event that
an item of Indebtedness or preferred stock meets the criteria of more than one
of the categories of Permitted Debt described in clauses (1) through (12) in
the second paragraph of this covenant or is entitled to be incurred pursuant to
the first paragraph of this covenant, the Company shall, in its sole
discretion, classify or reclassify such item of Indebtedness in any manner that
complies with this covenant. Accrual of interest, accretion or amortization of
original issue discount and the payment of interest in the form of additional
Indebtedness will not be deemed to be an incurrence of Indebtedness for
purposes of this covenant.
Liens
The Indenture will provide that the Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, create, incur,
assume or suffer to exist any Lien securing Indebtedness or trade payables on
any asset now owned or hereafter acquired, or any income or profits therefrom
or assign or convey any right to receive income therefrom, except Permitted
Liens.
48
Dividend and Other Payment Restrictions Affecting Subsidiaries
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction on the ability of
any Restricted Subsidiary to:
(1) (a) pay dividends or make any other distributions to the Company or
any of its Restricted Subsidiaries (x) on its Capital Stock or (y) with
respect to any other interest or participation in, or measured by, its
profits, or (b) pay any indebtedness owed to the Company or any of its
Restricted Subsidiaries;
(2) make loans or advances to the Company or any of its Restricted
Subsidiaries; or
(3) transfer any of its properties or assets to the Company or any of
its Restricted Subsidiaries.
However, the foregoing restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(a) any agreement or instrument governing Existing Indebtedness as in
effect on the Issue Date or as amended, modified, restated or renewed in
any manner not materially more restrictive, taken as a whole,
(b) the Indenture, the Notes or any senior credit facility that may be
obtained in the future,
(c) applicable law,
(d) any instrument governing Indebtedness or Capital Stock of a Person
acquired by the Company or any of its Restricted Subsidiaries as in effect
at the time of such acquisition (except to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the property
or assets of the Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of the Indenture
to be incurred,
(e) by reason of customary non-assignment provisions in leases or
licenses or other contracts entered into in the ordinary course of
business,
(f) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in
clause (3) above on the property so acquired,
(g) the provisions of agreements governing Indebtedness incurred
pursuant to clause (4) of the second paragraph of the covenant described
above under the caption "--Incurrence of Indebtedness and Issuance of
Preferred Stock,"
(h) any agreement for the sale of a Restricted Subsidiary that restricts
that Restricted Subsidiary pending its sale,
(i) Permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing such Permitted Refinancing
Indebtedness are not materially more restrictive, taken as a whole, than
those contained in the agreements governing the Indebtedness being
refinanced,
(j) Liens permitted to be incurred pursuant to the provisions of the
covenant described under the caption "--Liens" that limit the right of the
debtor to transfer the assets subject to such Liens,
(k) any Indebtedness incurred in compliance with the covenant under the
caption "--Incurrence of Indebtedness and Issuance of Preferred Stock" or
any agreement pursuant to which such Indebtedness is issued if the
encumbrance or restriction applies only in the event of a payment default
or default with respect to a financial covenant contained in the
Indebtedness or agreement and the encumbrance or restriction is not
materially more disadvantageous to the Holders of the Notes than is
customary in comparable financings (as determined by the Company) and the
Company determines that any such encumbrance or restriction will not
materially affect the Company's ability to pay interest or principal on the
Notes,
49
(l) provisions with respect to the disposition or distribution of assets
or property in joint venture agreements and other similar agreements and
(m) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business.
Merger, Consolidation or Sale of Assets
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:
(1) 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;
(2) 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 shall
have been made assumes all our obligations under the Notes and the
Indenture pursuant to a supplemental Indenture in a form reasonably
satisfactory to the Trustee;
(3) in the case of a transaction involving the Company, immediately
after giving effect to such transaction and the use of any net proceeds
therefrom, on a pro forma basis, the Consolidated Net Worth of the Company
or the successor, as the case may be, would be at least equal to the
Consolidated Net Worth of the Company immediately prior to such transaction
(exclusive of any adjustments to Consolidated Net Worth attributable to
transaction costs) less any amount treated as a Restricted Payment in
connection with such transaction in accordance with the Indenture; and
(4) immediately before and after such transaction no Default exists.
Transactions With Affiliates
The Company will not, and will not permit any of its Restricted Subsidiaries
to, make any payment to, or sell, lease, transfer or otherwise dispose of any
of its properties or assets to, or purchase any property or assets from, or
enter into or make or amend any transaction, contract, agreement,
understanding, loan, advance or Guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an "Affiliate Transaction"), unless:
(1) such Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Restricted Subsidiary than those that would
have been obtained in a comparable transaction by the Company or such
Restricted Subsidiary with an unrelated Person and
(2) the Company delivers to the Trustee:
(a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$2.0 million, a resolution of the Board of Directors set forth in an
Officers' Certificate certifying that such Affiliate Transaction
complies with clause (1) above and that such Affiliate Transaction has
been approved by a majority of the disinterested members of the Board
of Directors; and
(b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$10.0 million, an opinion as to the fairness to the Holders of such
Affiliate Transaction from a financial point of view issued by an
accounting, appraisal or investment banking firm of national standing.
Notwithstanding the foregoing, the following items shall not be deemed to be
Affiliate Transactions:
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(1) any employment arrangements with any executive officer of the
Company or a Restricted Subsidiary that is entered into by the Company or
any of its Restricted Subsidiaries in the ordinary course of business and
consistent with compensation arrangements of similarly situated executive
officers at comparable companies engaged in Permitted Businesses,
(2) transactions between or among the Company and/or its Restricted
Subsidiaries,
(3) payment of outside directors' fees in an aggregate annual amount not
to exceed $50,000 per Person,
(4) Restricted Payments and Permitted Investments that are permitted by
the provisions of the Indenture described above under the caption "--
Restricted Payments" and
(5) the issuance or sale of Equity Interests (other than Disqualified
Stock) of the Company.
Sale and Leaseback Transactions
The Company will not, and will not permit any of its Restricted Subsidiaries
to, enter into any sale and leaseback transaction (as seller); provided that
the Company or any of its Restricted Subsidiaries may enter into a sale and
leaseback transaction if:
(1) the Company or such Restricted Subsidiary, as applicable, could have
(a) incurred Indebtedness in an amount equal to the Attributable Debt
relating to such sale and leaseback transaction pursuant to the Debt to
Adjusted Consolidated Cash Flow Ratio test set forth in the first paragraph
of the covenant described above under the caption "--Incurrence of
Indebtedness and Issuance of Preferred Stock" and (b) incurred a Lien to
secure such Indebtedness pursuant to the covenant described above under the
caption "--Liens;"
(2) the gross cash proceeds of such sale and leaseback transaction are
at least equal to the fair market value (as determined in good faith by the
Board of Directors) of the property that is the subject of such sale and
leaseback transaction; and
(3) the transfer of assets in such sale and leaseback transaction is
permitted by, and the Company applies the proceeds of such transaction in
compliance with, the covenant described above under the caption "--Purchase
at the Option of Holders--Asset Sales."
Limitations on Issuances of Guarantees of Indebtedness
The Company will not permit any Restricted Subsidiary, directly or
indirectly, to Guarantee or pledge any assets to secure the payment of any
Indebtedness of the Company (except Indebtedness of the Company under a
guarantee of Indebtedness of one or more of its Restricted Subsidiaries) unless
such Restricted Subsidiary simultaneously executes and delivers a supplemental
Indenture to the Indenture providing for the Guarantee of the payment of the
Notes by such Restricted Subsidiary, which Guarantee shall be senior to or pari
passu with such Restricted Subsidiary's Guarantee of or pledge to secure such
other Indebtedness.
Notwithstanding the foregoing, any such Guarantee by a Restricted Subsidiary
of the Notes shall provide by its terms that it shall be automatically and
unconditionally released and discharged upon any sale, exchange or transfer, to
any Person other than a Restricted Subsidiary of the Company, of all of the
Company's stock in, or all or substantially all the assets of, such Restricted
Subsidiary, which sale, exchange or transfer is made in compliance with the
applicable provisions of the Indenture. The form of such Guarantee will be
attached as an exhibit to the Indenture.
Business Activities
The Company will not, and will not permit any Restricted Subsidiary to,
engage in any business other than Permitted Businesses, except to such extent
as would not be material to the Company and its Restricted Subsidiaries taken
as a whole.
51
Reports
Whether or not required by the rules and regulations of the Commission (the
"Commission"), so long as any Notes are outstanding, the Company will furnish
to the Holders of Notes:
(i) all quarterly and annual financial information that would be
required to be contained in a filing with the 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" that describes the financial condition and results of
operations of the Company and its consolidated Subsidiaries (showing in
reasonable detail, in the footnotes to the financial statements and in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" (in each case to the extent not prohibited by the Commission's
rules and regulations), (a) the financial condition and results of
operations of the Company and its Restricted Subsidiaries separate from the
financial condition and results of operations of the Unrestricted
Subsidiaries of the Company and (b) the Tower Cash Flow for the most
recently completed fiscal quarter and the Adjusted Consolidated Cash Flow
for the most recently completed four-quarter period) and, with respect to
the annual information only, a report thereon by the Company's certified
independent accountants; and
(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,
in each case within the time periods specified in the Commission's rules
and regulations.
In addition, following the consummation of the Exchange Offer contemplated
by the registration rights agreement, whether or not required by the rules and
regulations of the Commission, the Company will file a copy of all such
information and reports with the Commission for public availability within the
time periods specified in the Commission's rules and regulations (unless the
Commission will not accept such a filing) and make such information available
to securities analysts and prospective investors upon request. In addition, the
Company will, for so long as any Notes remain outstanding, furnish to the
Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act.
Events of Default and Remedies
Each of the following constitutes an Event of Default:
(1) default for 30 days in the payment when due of interest on the
Notes;
(2) default in payment when due of the principal of or premium, if any,
on the Notes;
(3) failure by the Company or any of its Subsidiaries to comply with the
provisions described under the caption "--Certain Covenants--Merger,
Consolidation or Sale of Assets" or failure by the Company to consummate a
Change of Control Offer or Asset Sale Offer in accordance with the
provisions of the Indenture applicable thereto;
(4) failure by the Company or any of its Subsidiaries for 30 days after
notice to comply with any of its other agreements in the Indenture or the
Notes;
(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 of its Significant
Subsidiaries (or the payment of which is guaranteed by the Company or any
of its Significant Subsidiaries) 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 (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
52
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 $10.0 million or more;
(6) failure by the Company or any of its Significant Subsidiaries to pay
final judgments aggregating in excess of $10.0 million, which judgments are
not paid, discharged or stayed for a period of 60 days; or
(7) certain events of bankruptcy or insolvency with respect to the
Company or any of its Restricted Subsidiaries that is a Significant
Subsidiary.
If any Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the then outstanding Notes may declare
all of the Notes to be due and payable immediately. Upon any such declaration,
the principal of and accrued and unpaid interest, if any, shall become due and
payable immediately. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, with respect
to the Company, all outstanding Notes will become due and payable without
further action or notice. Holders of the Notes may not enforce the Indenture or
the Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes.
The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each Holder of the Notes notice
of the Default within 90 days after it occurs. Except in the case of a Default
in the payment of principal of or interest on any Note, the Trustee may
withhold notice if and so long as a committee of its trust officers determines
that withholding notice is not opposed to the interest of the Holders of the
Notes. In addition, the Company is required to deliver to the Trustee, within
90 days after the end of each fiscal year, a certificate indicating whether the
signers thereof know of any Default that occurred during the previous year. The
Company is also required to deliver to the Trustee, forthwith after the
occurrence thereof, written notice of any event that would constitute a
Default, the status thereof and what action the Company is taking or proposes
to take in respect thereof.
No Personal Liability of Directors, Officers, Employees and Stockholders
No director, officer, employee, incorporator or stockholder of the Company,
as such, shall have any liability for any obligations of the Company under the
Notes, the Indenture or for any claim based on, in respect of, or by reason of,
such obligations or their creation. Each Holder of Notes by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
Legal Defeasance and Covenant Defeasance
We may, at our option and at any time, elect to have all of our obligations
discharged with respect to the outstanding Notes ("Legal Defeasance") except
for:
(1) the rights of Holders of outstanding Notes to receive payments in
respect of the principal of, premium, if any, and interest on such Notes
when such payments are due from the trust referred to below,
(2) the Company's obligations with respect to the Notes concerning
issuing temporary Notes, registration of Notes, mutilated, destroyed, lost
or stolen Notes and the maintenance of an office or agency for payment and
money for security payments held in trust,
53
(3) the rights, powers, trusts, duties and immunities of the Trustee,
and the Company's obligations in connection therewith and
(4) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have
the obligations of the Company released with respect to certain covenants that
are described in the Indenture ("Covenant Defeasance") and thereafter any
omission to comply with such obligations shall not constitute a Default or
Event of Default with respect to the Notes. In the event Covenant Defeasance
occurs, certain events (not including non-payment and bankruptcy, receivership,
rehabilitation and insolvency events with respect to the Company) described
under "--Events of Default and Remedies" will no longer constitute an Event of
Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders of the Notes, cash in United States dollars,
noncallable Government Securities, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants, to pay the principal of, premium,
if any, and interest on the outstanding Notes on the stated maturity or on
the applicable redemption date, as the case may be, and the Company must
specify whether the Notes are being defeased to maturity or to a particular
redemption date;
(2) in the case of Legal Defeasance, the Company shall have delivered to
the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that (A) the Company has received
from, or there has been published by, the Internal Revenue Service a ruling
or (B) since the date of the Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and
based thereon such opinion of counsel shall confirm that, the Holders of
the outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Legal Defeasance had
not occurred;
(3) in the case of Covenant Defeasance, the Company shall have delivered
to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that the Holders of the outstanding
Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(4) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit (other than a Default or Event of Default
resulting from the borrowing of funds to be applied to such deposit) or
insofar as Events of Default from bankruptcy or insolvency events with
respect to the Company are concerned, at any time in the period ending on
the 91st day after the date of deposit;
(5) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material
agreement or instrument (other than the Indenture) to which the Company or
any of its Restricted Subsidiaries is a party or by which the Company or
any of its Restricted Subsidiaries is bound;
(6) the Company must have delivered to the Trustee an opinion of counsel
to the effect that after the 91st day following the deposit, the trust
funds, will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
(7) the Company must deliver to the Trustee an Officers' Certificate
stating that the deposit was not made by the Company with the intent of
preferring the Holders of Notes over the other creditors of the Company
with the intent of defeating, hindering, delaying or defrauding creditors
of the Company or others; and
54
(8) the Company must deliver to the Trustee an Officers' Certificate and
an opinion of counsel, each stating that all conditions precedent provided
for relating to Legal Defeasance or the Covenant Defeasance have been
complied with.
Transfer and Exchange
A Holder may transfer or exchange 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. The Company is not
required to transfer or exchange any Note selected for redemption. Also, the
Company is not required to transfer or exchange any Note for a period of 15
days before a selection of Notes to be redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
Amendment, Supplement and Waiver
Except as provided in the next two succeeding paragraphs, the Indenture or
the Notes may be amended or supplemented with the consent of the Holders of at
least 51% of the aggregate principal amount of the Notes then outstanding
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Notes), and any existing default or
compliance with any provision of the Indenture or the Notes may be waived with
the consent of the Holders of at least 51% of the principal amount of the then
outstanding Notes (including consents obtained in connection with a tender
offer or exchange offer for Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder):
(1) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver,
(2) reduce the principal of or change the fixed maturity of any Note or
alter the provisions with respect to the redemption of the Notes
(specifically excluding the provisions relating to the covenants described
above under the caption "Purchase at the Option of Holders"),
(3) reduce the rate of or change the time for payment of interest on any
Note,
(4) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the Notes and a waiver of the payment default
that resulted from such acceleration),
(5) make any Note payable in money other than that stated in the Notes,
(6) make any change in the provisions of the Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive
payments of principal of or premium, if any, or interest on the Notes,
(7) waive a redemption payment with respect to any Note (specifically
excluding the payment required by one of the covenants described above
under the caption "Purchase at the Option of Holders"),
(8) except as provided under the caption "Legal Defeasance and Covenant
Defeasance" or in accordance with the terms of any Subsidiary Guarantee,
release a Subsidiary Guarantor from its obligations under its Subsidiary
Guarantee or make any change in a Subsidiary Guarantee that would adversely
affect the Holders of the Notes,
(9) provide for contractual subordination of the Notes or
(10) make any change in the foregoing amendment and waiver provisions.
55
Notwithstanding the foregoing, without the consent of any Holder of Notes,
the Company and the Trustee may amend or supplement the Indenture or the Notes
to cure any ambiguity, defect or inconsistency, to provide for uncertificated
Notes in addition to or in place of certificated Notes, to provide for the
assumption of the Company's obligations to Holders of Notes in the case of a
merger or consolidation, to make any change that would provide any additional
rights or benefits to the Holders of Notes or that does not adversely affect
the legal rights under the Indenture of any such Holder, or to comply with
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act.
Concerning the Trustee
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage in
other transactions; however, if it acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the Commission for permission
to continue or resign.
The Holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The 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 decree 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 Notes, unless such Holder shall have offered to
the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
Additional Information
Anyone who receives this prospectus may obtain a copy of the Indenture and
registration rights agreement without charge by writing to SBA Communications
Corporation, One Town Center Road, Third Floor, Boca Raton, Florida 33486,
Attention: General Counsel.
Certain Definitions
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as
any other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified Person, (1)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (2) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Adjusted Consolidated Cash Flow" has the meaning given to such term in the
definition of "Debt to Adjusted Consolidated Cash Flow Ratio."
"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 that
beneficial ownership of 10% or more of the Voting Stock of a Person shall be
deemed to be control.
56
"Asset Sale" means:
(1) the sale, lease, conveyance or other disposition of any assets or
rights (including, without limitation, by way of a sale and leaseback, as
seller), in any case, outside of the ordinary course of business provided
that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Company and its Subsidiaries taken
as a whole will be governed by the provisions of the Indenture described
above under the caption "--Purchase at the Option of Holders--Change of
Control" and/or the provisions described above under the caption "Merger,
Consolidation or Sale of Assets" and not by the provisions of the Asset
Sale covenant and
(2) the issue or sale by the Company or any of its Restricted
Subsidiaries of Equity Interests of any of the Company's Subsidiaries
(other than (x) directors' qualifying shares or shares required by
applicable law to be held by a Person other than the Company or a
Restricted Subsidiary or (y) Permitted Subsidiary Equity Interests), in the
case of either clause (1) or (2), whether in a single transaction or a
series of related transactions (a) that have a fair market value in excess
of $2.0 million or (b) for net proceeds in excess of $2.0 million.
Notwithstanding the foregoing, the following items shall not be deemed to be
Asset Sales:
(1) a transfer of assets by the Company to a Restricted Subsidiary or by
a Restricted Subsidiary to the Company or to another Restricted Subsidiary,
(2) an issuance of Equity Interests by a Subsidiary to the Company or to
another Restricted Subsidiary,
(3) a Restricted Payment or Permitted Investment that is permitted by
the covenant described above under the caption "Certain Covenants--
Restricted Payments,"
(4) grants of leases or licenses in the ordinary course of business, and
(5) disposals of Cash Equivalents.
"Attributable Debt" in respect of a sale and leaseback transaction means, at
the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Broker-Dealer" means any broker or dealer registered under the Exchange
Act.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (1) in the case of a corporation, corporate stock, (2)
in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (3) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited) and (4) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person.
"Cash Equivalents" means:
(1) United States dollars,
(2) securities issued or directly and fully guaranteed or insured by the
United States government or any agency or instrumentality thereof (provided
that the full faith and credit of the United States is pledged in support
thereof) having maturities of not more than 12 months from the date of
acquisition,
57
(3) certificates of deposit and eurodollar time deposits with maturities
of 12 months or less from the date of acquisition, bankers' acceptances
with maturities not exceeding 12 months and overnight bank deposits, in
each case with any lender party to the Senior Credit Facility or with any
domestic commercial bank having capital and surplus in excess of $500.0
million and a Thompson Bank Watch Rating of "B" or better,
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and (3) above
entered into with any financial institution meeting the qualifications
specified in clause (3) above,
(5) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Ratings Group and in each case
maturing within 12 months after the date of acquisition and
(6) money market funds at least 95% of the assets of which constitute
Cash Equivalents of the kinds described in clauses (1)-(5) of this
definition.
"Change of Control" means the occurrence of any of the following:
(1) the sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company and
its Restricted Subsidiaries, taken as a whole to any "person" (as such term
is used in Section 13(d)(3) of the Exchange Act) other than a Principal or
a Related Party of a Principal;
(2) the adoption of a plan relating to the liquidation or dissolution of
the Company;
(3) the filing of a petition by or against the Company under any
bankruptcy or insolvency laws, which petition, if involuntary, is not
withdrawn within sixty (60) calendar days after such filing;
(4) any Person other than the Principal or his Related Parties has the
right or ability by voting power or contract to (i) elect or designate for
election a majority of the board of directors of the Company or (ii) direct
the operation of the Company pursuant to a management agreement or similar
agreement, other than officers or directors serving in their capacities as
such;
(5) the consummation of any transaction (including, without limitation,
any merger or consolidation) the result of which is that any "person" (as
defined above) other than the Principal and his Related Parties, becomes
the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-
5 under the Exchange Act, except that a person shall be deemed to have
"beneficial ownership" of all securities that such person has the right to
acquire, whether such right is currently exercisable or is exercisable only
upon the occurrence of a subsequent condition), directly or indirectly, of
more than 50% of the Voting Stock of the Company (measured by voting power
rather than number of shares);
(6) the first day on which a majority of the members of the Board of
Directors of the Company are not Continuing Directors; or
(7) the Company consolidates with, or merges with or into, any Person,
or any Person consolidates with, or merges with or into, the Company, in
any such event pursuant to a transaction in which any of the outstanding
Voting Stock of the Company is converted into or exchanged for cash,
securities or other property, other than any such transaction where (x) the
Voting Stock of the Company outstanding immediately prior to such
transaction is converted into or exchanged for Voting Stock (other than
Disqualified Stock) of the surviving, or transferee Person constituting a
majority of the outstanding, shares of such Voting Stock of such surviving,
or transferee Person (immediately after giving effect to such issuance) or
(y) the Principals and their Related Parties own a majority of such
outstanding shares after such transaction.
"Completed Tower" means any wireless communication tower owned or managed by
the Company or any of its Restricted Subsidiaries that, as of any date of
determination:
58
(1) has at least one wireless tenant that has executed a definitive
lease with the Company or any of its Restricted Subsidiaries; and
(2) has capacity for at least two tenants in addition to the tenant
referred to in clause (1) of this definition.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus:
(1) provision for taxes based on income or profits of such Person and
its Restricted Subsidiaries for such period to the extent that such
provision for taxes was included in computing, such Consolidated Net
Income, plus
(2) "Consolidated Interest Expense", which means
(A) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period determined in accordance with GAAP,
whether paid or accrued and whether or not capitalized (including,
without limitation, amortization of debt issuance costs and original
issue discount, non-cash interest payments, the interest component of
any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, imputed interest
with respect to Attributable Debt, commissions, discounts and other
fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net payments (if any) pursuant to Hedging
Obligations), to the extent that any such expense was deducted in
computing such Consolidated Net Income, plus
(B) all preferred stock dividends paid or accrued in respect of the
Company's and its Restricted Subsidiaries' preferred stock to Persons
other than the Company or a Wholly Owned Restricted Subsidiary of the
Company other than preferred stock dividends paid by the Company in
shares of preferred stock that is not Disqualified Stock, plus
(3) depreciation, amortization (including amortization of goodwill and
other intangibles and other non-cash expenses (excluding any such non-cash
expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period)) of such Person and its Restricted
Subsidiaries for such period to the extent that such depreciation,
amortization and other non-cash expenses were deducted in computing such
Consolidated Net Income, minus
(4) non-cash items increasing such Consolidated Net Income for such
period (excluding any items that were accrued in the ordinary course of
business), in each case on a consolidated basis and determined in
accordance with GAAP.
"Consolidated Indebtedness" means, with respect to any Person as of any date
of determination, the sum, without duplication, of:
(1) the total amount of Indebtedness of such Person and its Restricted
Subsidiaries, plus
(2) the total amount of Indebtedness of any other Person, to the extent
that such Indebtedness has been Guaranteed by the referent Person or one or
more of its Restricted Subsidiaries, plus
(3) the aggregate liquidation value of all Disqualified Stock of such
Person and all preferred stock of Restricted Subsidiaries of such Person
(other than Permitted Subsidiary Equity Interests), in each case,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" has the meaning given to such term in the
definition of Consolidated Cash Flow.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that:
59
(1) the Net Income (but not loss) of any Person (other than the Company)
that is not a Restricted Subsidiary of the Company or that is accounted for
by the equity method of accounting shall be excluded, except that for
purposes of determining compliance with the covenant described under
"Certain Covenants--Restricted Payments" above, such Net Income shall be
included but only to the extent of the amount of dividends or distributions
paid in cash to the referent Person or a Restricted Subsidiary thereof,
(2) the Net Income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded,
(3) the cumulative effect of a change in accounting principles shall be
excluded,
(4) the Net Income (and net loss) of any Unrestricted Subsidiary shall
be excluded whether or not distributed to the Company or one of its
Restricted Subsidiaries or whether or not otherwise included pursuant to
clause (1) and
(5) any deferred financing costs written off in connection with the
early extinguishment of any Indebtedness shall be added back to
Consolidated Net Income to the extent otherwise deducted therefrom.
"Consolidated Net Worth" of any Person as of any date means the
stockholders' equity (including any Preferred Stock that is classified as
equity under GAAP, other than Disqualified Stock) of such Person and its
Restricted Subsidiaries on a consolidated basis at the end of the fiscal
quarter immediately preceding such date, as determined in accordance with GAAP,
less any amount attributable to Unrestricted Subsidiaries.
"Consolidated Tangible Assets" means, with respect to the Company, the total
consolidated assets of the Company and its Restricted Subsidiaries, less the
total intangible assets of the Company and its Restricted Subsidiaries, as
shown on the most recent internal consolidated balance sheet of the Company and
such Restricted Subsidiaries calculated on a consolidated basis in accordance
with GAAP.
"Continuing Directors" means, as of any date of determination, any member of
the Board of Directors of the Company who:
(1) was a member of such Board of Directors on the date of the
Indenture,
(2) was nominated for election or elected to such Board of Directors
with the approval of a majority of the Continuing Directors who were
members of such Board at the time of such nomination or election or,
(3) is a designee of a Principal or was nominated by a Principal.
"Credit Facility" means one or more senior debt facilities (including,
without limitation, the Senior Credit Facility) or commercial paper facilities
with banks or other institutional lenders providing for revolving credit loans,
term loans or letters of credit, in each case, as amended, modified, renewed,
refunded, replaced or refinanced in whole or in part from time to time
(including subsequent refinancings).
"Debt to Adjusted Consolidated Cash Flow Ratio" means, as of any date of
determination, the ratio of (a) the Consolidated Indebtedness of the Company as
of such date to (b) the sum of:
(1) the Consolidated Cash Flow of the Company for the four most recent
full fiscal quarters ending immediately prior to such date for which
internal financial statements are available, less the Company's Tower Cash
Flow for such four-quarter period, plus
(2) the product of four times the Company's Tower Cash Flow for the most
recent quarterly period (such sum being, referred to as "Adjusted
Consolidated Cash Flow"), in each case determined on a pro forma basis
after giving effect to all acquisitions or dispositions of assets made by
the Company and its Subsidiaries from the beginning of such four-quarter
period through and including such date of determination (including any
related financing transactions) as if such acquisitions and dispositions
had occurred at the beginning of such four-quarter period. For purposes of
making the computation referred to above:
60
(A) acquisitions that have been made by the Company or any of its
Restricted Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the reference period
or subsequent to such reference period and on or prior to the Calculation
Date shall be deemed to have occurred on the first day of the reference
period and Consolidated Cash Flow for such reference period shall be
calculated without giving effect to clause (2) of the proviso set forth in
the definition of Consolidated Net Income, and
(B) the Consolidated Cash Flow attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded.
"Default" means any event that is, or with the passage of time or the giving
of notice or both would be, an Event of Default.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable, in each case, at the option of the Holder thereof), or upon the
happening of any event, matures or is 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 date that is 91 days after the
date on which the Notes mature; provided, however, (1) that any Capital Stock
that would constitute Disqualified Stock solely because the Holders thereof
have the right to require the Company to repurchase such Capital Stock upon the
occurrence of a Change of Control or an Asset Sale shall not constitute
Disqualified Stock if the terms of such Capital Stock provide that the Company
may not repurchase or redeem any such Capital Stock pursuant to such provisions
unless such repurchase or redemption complies with the covenant described under
the caption "Certain Covenants--Restricted Payments" and (2) that any preferred
stock that would constitute Disqualified Stock shall not constitute
Disqualified Stock if issued as a dividend on then outstanding shares of
preferred stock of the same class or series.
"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) (it being understood that
Permitted Subsidiary Equity Interests shall not be deemed Equity Interests of
the Company until they have been converted into Equity Interests of the Company
in accordance with the terms thereof).
"Exchange Offer" means exchange and issuance by the Company of a principal
amount of New Notes (which shall be registered pursuant to the Exchange Offer
Registration Statement) equal to the outstanding principal amount of Notes that
are tendered by such Holders in connection with such exchange and issuance.
"Exchange Offer Registration Statement" means the Registration Statement
relating to the Exchange Offer, including the related Prospectus.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Credit Facility) in existence
on the date of original issuance of the Notes, until such amounts are repaid.
"fair market value" means the price which could be negotiated in an arm's
length, free market transaction, for cash, between a willing and able seller
and a willing and able buyer, neither of whom is under undue pressure, or
compulsion to complete the transaction. Fair market value shall be determined
by the Board of Directors of the Company acting reasonably and in good faith,
evidenced by a resolution of the Company's Board of Directors delivered to the
Trustee; provided, however, that fair market value shall be determined by a
nationally recognized independent investment banking, accounting or appraisal
firm for any transaction which is reasonably likely to exceed $10 million in
value.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity
61
as have been approved by a significant segment of the accounting profession,
which are in effect from time to time.
"Guarantee" means a guarantee (other than by, endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (1) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (2) other agreements or
arrangements relating to or based upon fluctuations in interest rates or
currency exchange rates.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable,
if and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP, as well as all
Indebtedness of others secured by a Lien on any asset of such Person whether or
not such Indebtedness is assumed by such Person (the amount of such
Indebtedness as of any date being deemed to be the lesser of the value of such
property or assets as of such date or the principal amount of such Indebtedness
of such other Person so secured) and, to the extent not otherwise included, the
Guarantee by such Person of any Indebtedness of any other Person. The amount of
any Indebtedness outstanding as of any date shall be (1) the accreted value
thereof, in the case of any Indebtedness issued with original issue discount,
and (2) the principal amount thereof, together with any interest thereon that
is more than 30 days past due, in the case of any other Indebtedness. In
calculating the amount of Indebtedness outstanding, letters of credit
supporting obligations otherwise included as Indebtedness (and reimbursement
obligations with respect to such letters of credit to the extent supporting
obligations otherwise included in Indebtedness) shall not be included.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Restricted Subsidiary of the Company sells or otherwise
disposes of all Equity Interests of any direct or indirect Subsidiary of the
Company or a Restricted Subsidiary of the Company issues any of its Equity
Interests such that, in each case, after giving effect to any such sale or
disposition, such Person is no longer a Restricted Subsidiary of the Company,
the Company shall be deemed to have made an Investment on the date of any such
sale or disposition equal to the fair market value of the Equity Interests of
such Subsidiary not sold or disposed of in an amount determined as provided in
the final paragraph of the covenant described above under the caption "--
Certain Covenants--Restricted Payments."
"Issue Date" means February 2, 2001, the date of original issuance of the
Notes.
"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).
62
"March 1998 Senior Discount Note Indenture" means that certain Indenture
between the Company and State Street Bank and Trust Company, as Trustee, dated
as of March 2, 1998, as amended by the First Supplemental Indenture between the
Company and the Trustee, dated as of March 5, 1999 and as amended by the Second
Supplemental Indenture between the Company and the Trustee, dated as of October
28, 1999.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (1) any gain or loss,
together with any related provision for taxes on such gain or loss, realized in
connection with (a) any asset sale outside the ordinary course of business
(including, without limitation, dispositions pursuant to sale and leaseback
transactions) or (b) the disposition of any securities by such Person or any of
its Restricted Subsidiaries or the extinguishment of any Indebtedness of such
Person or any of its Restricted Subsidiaries and (2) any extraordinary gain or
loss, together with any related provision for taxes on such extraordinary gain
or loss.
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of:
(1) the direct costs relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees, and sales
commissions) and any relocation expenses incurred as a result thereof,
(2) taxes paid or payable as a result thereof (after taking into account
any available tax credits or deductions and any tax sharing arrangements),
(3) amounts required to be applied to the repayment of Indebtedness
(other than Indebtedness under a Credit Facility) secured by a Lien on the
asset or assets that were the subject of such Asset Sale,
(4) all distributions and other payments required to be made to minority
interest Holders in Restricted Subsidiaries as a result of such Asset Sale,
(5) the deduction of appropriate amounts provided by the seller as a
reserve in accordance with GAAP against any liabilities associated with the
assets disposed of in such Asset Sale and retained by the Company or any
Restricted Subsidiary after such Asset Sale, and
(6) without duplication, any reserves that the Company's Board of
Directors determines in good faith should be made in respect of the sale
price of such asset or assets for post closing adjustments;
provided that in the case of any reversal of any reserve referred to in clause
(5) or (6) above, the amount so reserved shall be deemed to be Net Proceeds
from an Asset Sale as of the date of such reversal.
"New Notes" means the Company's 10 1/4% senior notes due 2009 to be issued
pursuant to the Indenture (1) in the Exchange Offer or (2) as contemplated by
the registration rights agreement.
"Non-Recourse Debt" means Indebtedness (1) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; (2) no default with respect to which
(including any rights that the Holders thereof may have to take enforcement
action against an Unrestricted Subsidiary) would permit (upon notice, lapse of
time or both) any Holder of any other Indebtedness of the Company or any of its
Restricted Subsidiaries to declare a default on such other Indebtedness or
cause the payment thereof to be accelerated or payable prior to its stated
maturity; and (3) as to which the lenders have been notified in writing that
they will not have any recourse to the stock or assets of the Company or any of
its Restricted Subsidiaries.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
63
"Payment Restriction" means, with respect to a subsidiary of any Person, any
encumbrance, restriction or limitation, whether by operation of the terms of
its charter or by reason of any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation, on the ability of (1) such subsidiary
to (a) pay dividends or make other distributions on its Capital Stock or make
payments on any obligation, liability or Indebtedness owed to such Person or
any other subsidiary of such Person, (b) make loans or advances to such Person
or any other subsidiary of such Person, or (2) such Person or any other
subsidiary of such Person to receive or retain any such (a) dividends,
distributions or payments, (b) loans or advances or (c) transfer of properties
or assets.
"Permitted Business" means any business conducted by the Company and its
Restricted Subsidiaries on the date of the Indenture and any other business
related, ancillary or complementary to any such business.
"Permitted Investments" means:
(a) any Investment in the Company or in a Restricted Subsidiary of the
Company;
(b) any Investment in Cash Equivalents;
(c) any Investment by the Company or any Restricted Subsidiary of the
Company in a Person, if as a result of such Investment (1) such Person
becomes a Restricted Subsidiary of the Company or (2) such Person is
merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or a
Restricted Subsidiary of the Company;
(d) any Restricted Investment made as a result of the receipt of non-
cash consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption "Purchase at
the Option of Holders--Asset Sales,"
(e) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of the Company;
(f) receivables created in the ordinary course of business;
(g) loans or advances to employees made in the ordinary course of
business not to exceed $5.0 million at any one time outstanding;
(h) securities and other assets received in settlement of trade debts or
other claims arising in the ordinary course of business; and
(i) other Investments in Permitted Businesses not to exceed 10% of the
Company's Consolidated Tangible Assets at any one time outstanding (each
such Investment being measured as of the date made and without giving
effect to subsequent changes in value).
"Permitted Liens" means:
(1) Liens securing Indebtedness of the Company under one or more Credit
Facilities that was permitted by the terms of the Indenture to be incurred;
(2) Liens securing any Indebtedness of any of the Company's Restricted
Subsidiaries that was permitted by the terms of the Indenture to be
incurred;
(3) Liens in favor of the Company;
(4) Liens existing on the Issue Date;
(5) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor;
64
(6) Liens securing Indebtedness permitted to be incurred under clause
(4) of the second paragraph of the covenant described above under the
caption "Certain Covenants--Incurrence of Indebtedness and Issuance of
Preferred Stock;" and
(7) Liens incurred in the ordinary course of business of the Company or
any Restricted Subsidiary of the Company with respect to obligations that
do not exceed $10 million at any one time outstanding and that (a) are not
incurred in connection with the borrowing of money or the obtaining of
advances or credit (other than trade credit in the ordinary course of
business) and (b) do not in the aggregate materially detract from the value
of the property or materially impair the use thereof in the operation of
business by the Company or such Restricted Subsidiary.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that:
(1) the principal amount (or initial accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal
amount of (or accreted value, if applicable), plus accrued interest on, the
Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of expenses and prepayment premiums incurred in
connection therewith),
(2) such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of,
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded,
(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the Notes, such
Permitted Refinancing Indebtedness is subordinated in right of payment to,
the Notes on terms at least as favorable to the Holders of Notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded, and
(4) such Indebtedness is incurred either by the Company or by the
Restricted Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Permitted Subsidiary Equity Interests" means Equity Interests of Restricted
Subsidiaries of the Company that
(1) will automatically convert into common stock of the Company upon the
occurrence of an Event of Default under the Indenture,
(2) does not entitle the Holder to any registration rights,
(3) is issued as consideration in a Tower Asset Acquisition and
(4) does not provide for any dividends other than in additional shares
of such Equity Interests.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any
subdivision or ongoing business of any such entity or substantially all of the
assets of any such entity, subdivision or business).
"Principal" means Steven E. Bernstein, his spouse, parents, children,
siblings, mother and father-in-law, sons and daughters-in-law and brothers and
sisters-in-law, or any other person who is supported, directly or indirectly,
to a material extent by Mr. Bernstein or their lineal descendants, spouses of
lineal descendants or lineal descendants of spouses, whether alive as of the
date hereof or born subsequently, any trusts or other estate planning vehicles
for the benefit of any of the foregoing, whether existing as of the date hereof
or created subsequently, or any estate or tax planning vehicles on the part of
Mr. Bernstein.
65
"Prospectus" means the prospectus included in a Registration Statement at
the time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
"Public Equity Offering" means an underwritten primary public offering of
common stock of the Company pursuant to an effective registration statement
under the Securities Act.
"Qualified Equity Interests" means Equity Interests of the Company other
than Disqualified Stock.
"Qualified Proceeds" means assets that are used or useful in, or Capital
Stock of any Person engaged in, a Permitted Business.
"Registration Statement" means any registration statement of the Company
relating to (a) an offering of New Notes pursuant to an Exchange Offer or (b)
the registration for resale of Transfer Restricted Securities pursuant to the
Shelf Registration Statement, in each case, (i) that is filed pursuant to the
provisions of the registration rights agreement and (ii) including the
Prospectus included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
"Related Party" with respect to any Principal means (A) any controlling
stockholder, 80% (or more) owned Subsidiary of such Principal or (B) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
members, partners, owners or Persons beneficially holding an 80% or more
controlling interest of which consist of such Principal and/or such other
Persons referred to in the immediately preceding clause (A).
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the relevant
Person that is not an Unrestricted Subsidiary.
"Seller Paper" means Indebtedness incurred by the Company or any of its
Restricted Subsidiaries as consideration in a Tower Asset Acquisition.
"Senior Credit Facility" means the Second Amended and Restated Credit
Agreement, dated as of December 16, 1999 by and among the Company, SBA
Telecommunications, Inc., the several lenders from time to parties thereto, and
Lehman Commercial Paper Inc., as administrative agent, and including any
related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as amended, modified,
renewed, refunded, replaced or refinanced in whole or in part from time to time
(including subsequent refinancings).
"Shelf Registration Statement" means the Shelf Registration Statement as
defined in the registration rights agreement.
"Significant Subsidiary" means, with respect to any Person, any Restricted
Subsidiary of such Person that would be a "significant subsidiary" of such
Person as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof, except
that all references to "10 percent" in Rule 1-02(w)(1), (2) and (3) shall mean
"5 percent."
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations
to repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
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"Strategic Equity Investment" means a cash contribution to the common equity
capital of the Company or a purchase from the Company of common Equity
Interests (other than Disqualified Stock), in either case by or from a
Strategic Equity Investor and for aggregate cash consideration of at least
$10.0 million.
"Strategic Equity Investor" means a Person engaged in a Permitted Business
whose Total Equity Market Capitalization exceeds $1 billion.
"Subsidiary" means, with respect to any Person, (1) any corporation,
association or other business entity 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 (2) any partnership (a) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (b) the only general partners of which are such Person or of one or
more Subsidiaries of such Person (or any combination thereof).
"Total Equity Market Capitalization" of any Person means, as of any day of
determination, the sum of (1) the product of (A) the aggregate number of
outstanding primary shares of common stock of such Person on such day (which
shall not include any options or warrants on, or securities convertible or
exchangeable into, shares of common stock of such person) multiplied by (B) the
average closing price of such common stock listed on a national securities
exchange or the Nasdaq National Market System over the 20 consecutive business
days immediately preceding such day, plus (2) the liquidation value of any
outstanding shares of preferred stock of such Person on such day.
"Tower Asset Acquisition" means an acquisition of Tower Assets or a business
substantially all of the assets of which are Tower Assets.
"Tower Assets" means wireless transmission towers and related assets that
are located on the site of a transmission tower.
"Tower Cash Flow" means, for any period, the Consolidated Cash Flow of the
Company and its Restricted Subsidiaries for such period that is directly
attributable to site rental revenue, license or management fees paid to manage,
lease or sublease space on communication sites owned, leased or managed by the
Company (collectively, "site leasing revenues"), all determined on a
consolidated basis and in accordance with GAAP. Tower Cash Flow will not
include revenue derived from the sale of assets. In allocating, corporate,
general, administrative and other operating expenses that are not, in the
financial statements of the Company allocated to any particular line of
business, such expenses shall be allocated to the Company's site leasing
business in proportion to the percentage of the Company's total revenues for
the applicable period that were site leasing revenues.
"Transfer Restricted Securities" means each Note, until the earliest to
occur of (a) the date on which such Note is exchanged in the Exchange Offer and
entitled to be resold to the public by the Holder thereof without complying
with the prospectus delivery requirements of the Act, (b) the date on which
such Note has been disposed of in accordance with a Shelf Registration
Statement, (c) the date on which such Note is disposed of by a Broker-Dealer
pursuant to the "Plan of Distribution" contemplated by the Exchange Offer
Registration Statement (including delivery of the Prospectus contained therein)
or (d) the date on which such Note is distributable to the public pursuant to
Rule 144 under the Act.
"Unrestricted Subsidiary" means any Subsidiary of the Company that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to
a Board Resolution; but only to the extent that such Subsidiary:
(a) has no Indebtedness other than Non-Recourse Debt;
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(b) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary of the Company
unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Restricted
Subsidiary than those that might be obtained at the time from Persons who
are not Affiliates of the Company;
(c) is a Person with respect to which neither the Company nor any of its
Restricted Subsidiaries has any direct or indirect obligation (x) to
subscribe for additional Equity Interests or (y) to maintain or preserve
such Person's financial condition or to cause such Person to achieve any
specified levels of operating results;
(d) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of the Company or any of its Restricted
Subsidiaries; and
(e) has at least one director on its board of directors that is not a
director or executive officer of the Company or any of its Restricted
Subsidiaries and has at least one executive officer that is not a director
or executive officer of the Company or any of its Restricted Subsidiaries.
Any such designation by the Board of Directors shall be evidenced to the
Trustee by filing with the Trustee a certified copy of the Board Resolution
giving effect to such designation and an Officers' Certificate certifying
that such designation complied with the foregoing conditions and was
permitted by the covenant described above under the caption "Certain
Covenants--Restricted Payments."
If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease
to be an Unrestricted Subsidiary for purposes of the Indenture and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of the Company as of such date (and, if such Indebtedness is not
permitted to be incurred as of such date under the covenant described above
under the caption "Certain Covenants--Incurrence of Indebtedness and Issuance
of Preferred Stock," the Company shall be in default of such covenant). The
Board of Directors of the Company may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that such designation shall
be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the
Company of any outstanding Indebtedness of such Unrestricted Subsidiary and
such designation shall only be permitted if (1) such Indebtedness is permitted
under the covenant described above under the caption "Certain Covenants--
Incurrence of Indebtedness and Issuance of Preferred Stock," calculated on a
pro forma basis as if such designation had occurred at the beginning of the
four-quarter reference period, and (2) no Default would occur or be in
existence following such designation.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (1) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (2) the then outstanding
principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person.
Book-Entry, Delivery and Form
The Old Notes were offered and sold to qualified institutional buyers
("Qualified Institutional Buyers") in reliance on Rule 144A and, to certain
non-U.S. holders, in reliance on Regulation S under the Securities Act.
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The Notes are represented by one or more permanent global notes in registered,
global form without interest coupons (collectively, the "Rule 144A Global
Note"). The Rule 144A Global Note was initially deposited upon issuance with
the trustee as custodian for the Depository Trust Company (the "DTC") in New
York, New York, and registered in the name of the DTC or its nominee, in each
case for credit to an account of a direct or indirect participant as described
below.
The Notes sold in offshore transactions in reliance on Regulation S under
the Securities Act are represented by one or more permanent global notes in
registered, global form without interest coupons (collectively, the "Regulation
S Global Note", the Regulation S Global Note and the Rule 144A Global Note,
collectively being called the "Global Notes"). The Regulation S Global Note is
registered in the name of the DTC or its nominee for credit to the subscribers'
respective accounts at the Euroclear System and Cedel Bank. Prior to the 40th
day after the closing date of the offering of the Old Notes (such period
through and including such 40th day being the "Distribution Compliance
Period"), beneficial interest in the Regulation S Global Note could be held
only through Euroclear or CEDEL. Beneficial interests in the Rule 144A Global
Note may not be exchanged for beneficial interests in the Regulation S Global
Note at any time except in the limited circumstances described below.
Except as set forth below, the Global Notes may be transferred, in whole and
not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Notes may not be exchanged for
notes in certificated form except in the limited circumstances described below.
See "--Exchange of Global Notes for Certificated Notes."
The Global Notes (including beneficial interests therein) are subject to
certain restrictions on transfer and bear a restrictive legend as described
under "Notice to Investors." In addition, transfer of beneficial interests in
the Global Notes are subject to the applicable rules and procedures of the
Depository and its direct or indirect participants (including, if applicable,
those of Euroclear and CEDEL), which may change from time to time.
Upon the transfer of certificated notes in physical form, if any, to a
Qualified Institutional Buyer or in accordance with Regulation S, such
certificated notes will, unless the relevant Global Note has previously been
exchanged in whole for certificated notes, be exchanged for an interest in a
Global Note. See "Notice to Investors."
Depository Procedures
The following description of the operations and procedures of DTC, Euroclear
and Clearstream are provided solely as a matter of convenience. These
operations and procedures are solely within the control of those respective
settlement systems and are subject to changes by them. We take no
responsibility for these operations and procedures and urge investors to
contact the system or their participants directly to discuss these matters.
DTC has advised us that it is a limited-purpose trust company created to
hold securities for its participating organizations (collectively, the
"Participants") and to facilitate the clearance and settlement of transactions
in those securities between Participants through electronic book-entry changes
in accounts of its Participants. The Participants include securities brokers
and dealers (including the initial purchasers), banks, trust companies,
clearing corporations and certain other organizations. Access to DTC's system
is also available to other entities such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own
securities held by or on behalf of DTC only through the Participants or the
Indirect Participants. The ownership interests in, and transfers of ownership
interests in, each security held by or on behalf of DTC are recorded on the
records of the Participants and Indirect Participants.
DTC has also advised us that, pursuant to procedures established by it:
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(1) upon deposit of the Global Notes, DTC will credit the accounts of
Participants designated by the initial purchasers with portions of the
principal amount of the Global Notes; and
(2) ownership of these interests in the Global Notes will be shown on,
and the transfer of ownership thereof will be effected only through,
records maintained by DTC (with respect to the Participants) or by the
Participants and the Indirect Participants (with respect to other owners of
beneficial interests in the Global Notes).
Investors in the Rule 144A Global Notes who are Participants in DTC's system
may hold their interests therein directly through DTC. Investors in the Rule
144A Global Notes who are not Participants may hold their interests in the Rule
144A Global Notes indirectly through organizations (including Euroclear and
Clearstream) which are Participants in that system. Investors in the Regulation
S Global Notes must initially hold their interests in the Regulation S Global
Notes through Euroclear or Clearstream, if they are participants in those
systems, or indirectly through organizations that are participants in those
systems. After the expiration of the Distribution Compliance Period (but not
earlier), investors may also hold interests in the Regulation S Global Notes
through Participants in DTC's system other than Euroclear and Clearstream.
Euroclear and Clearstream will hold interests in the Regulation S Global Notes
on behalf of their participants through customers' securities accounts in their
respective names on the books of their respective depositories, which are
Morgan Guaranty Trust Company of New York, Brussels office, as operator of
Euroclear, and Citibank, N.A., as, operator of Clearstream. All interests in a
Global Note, including those held through Euroclear or Clearstream, may be
subject to the procedures and requirements of DTC. Those interests held through
Euroclear or Clearstream may also be subject to the procedures and requirements
of those systems. The laws of some states require that certain persons take
physical delivery in definitive form of securities that they own. Consequently,
the ability to transfer beneficial interests in a Global Note to those persons
will be limited to that extent. Because DTC can act only on behalf of
Participants, which in turn act on behalf of Indirect Participants, the ability
of a person having beneficial interests in a Global Note to pledge those
interests to persons that do not participate in DTC's system, or otherwise take
actions in respect of those interests, may be affected by the lack of a
physical certificate evidencing those interests.
Except as described below under the caption "--Exchange of Global Notes for
Certificated Notes," owners of interests in the Global Notes will not have
notes registered in their names, will not receive physical delivery of notes in
certificated form and will not be considered the registered owners or "holders"
thereof under the Indenture of any purpose.
Payments in respect of the principal of, and interest and premium and
liquidated damages, if any, on a Global Note registered in the name of DTC or
its nominee will be payable to DTC in its capacity as the registered holder
under the Indenture. Under the terms of the Indenture, DTC, the trustee and us
will treat the persons in whose names the notes, including the Global Notes,
are registered as the owners of the notes for the purpose of receiving payments
and for all other purposes. Consequently, neither we, the trustee nor any agent
of us or the trustee has or will have any responsibility or liability for:
(1) any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of beneficial
ownership interests in the Global Notes or for maintaining, supervising or
reviewing any of DTC's records or any Participant's or Indirect
Participant's records relating to the beneficial ownership interests in the
Global Notes; or
(2) any other matter relating to the actions and practices of DTC or any
of its Participants or Indirect Participants.
DTC has advised us that its current practice, upon receipt of any payment in
respect of securities such as the notes (including principal and interest), is
to credit the accounts of the relevant Participants with the payment on the
payment date unless DTC has reason to believe it will not receive payment on
that payment date. Each relevant Participant is credited with an amount
proportionate to its beneficial ownership of an interest in the principal
amount of the relevant security as shown on the records of DTC. Payments by the
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Participants and the Indirect Participants to the beneficial owners of notes
will be governed by standing instructions and customary practices and will be
the responsibility of the Participants or the Indirect Participants and will
not be the responsibility of DTC, the trustee or us. Neither we nor the
trustee will be liable for any delay by DTC or any of its Participants in
identifying the beneficial owners of the notes, and we and the trustee may
conclusively rely on and will be protected in relying on instructions from DTC
or its nominee for all purposes.
Subject to the transfer restrictions set forth under "Notice to Investors,"
transfers between Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds, and transfers between
participants in Euroclear and Clearstream will be effected in accordance with
their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the
notes described herein, cross-market transfers between the Participants in
DTC, on the one hand, and Euroclear or Clearstream participants, on the other
hand, will be effected through DTC in accordance with DTC's rules on behalf of
Euroclear or Clearstream, as the case may be, by its respective depositary.
These cross-market transactions will require delivery of instructions to
Euroclear or Clearstream, as the case may be, by the counterparty in that
system in accordance with the rules and procedures and within the established
deadlines (Brussels time) of that system. Euroclear or Clearstream, as the
case may be, will, if the transaction meets its settlement requirements,
deliver instructions to its respective depositary to take action to effect
final settlement on its behalf by delivering or receiving interest in the
relevant Global Note in DTC, and making or receiving payment in accordance
with normal procedures for same-day funds settlement applicable to DTC.
Euroclear participants and Clearstream participants may not deliver
instructions directly to the depositories for Euroclear or Clearstream.
DTC has advised us that it will take any action permitted to be taken by a
holder of notes only at the direction of one or more Participants to whose
account DTC has credited the interests in the Global Notes and only in respect
of the portion of the aggregate principal amount of the notes as to which the
Participant or Participants has or have given direction. However, if there is
an Event of Default under the notes, DTC reserves the right to exchange the
Global Notes for legended notes in certificated form, and to distribute those
notes to its Participants.
Although DTC, Euroclear and Clearstream have agreed to the foregoing
procedures to facilitate transfers of interests in the Rule 144A Global Notes
and the Regulation S Global Notes among participants in DTC, Euroclear and
Clearstream, they are under no obligation to perform or to continue to perform
these procedures, and may discontinue these procedures at any time. Neither we
nor the trustee nor any of our or their respective agents will have any
responsibility for the performance by DTC, Euroclear or Clearstream or their
respective participants or indirect participants of their respective
obligations under the rules and procedures governing their operations.
Exchange of Global Notes for Certificated Notes
A Global Note is exchangeable for definitive notes in registered
certificated form ("Certificated Notes") if:
(1) DTC (a) notifies us that it is unwilling or unable to continue as
depositary for the Global Notes and we fail to appoint a successor
depositary or (b) has ceased to be a clearing agency registered under the
Exchange Act;
(2) we, at our option, notify the trustee in writing that we elect to
cause the issuance of the Certificated Notes; or
(3) there shall have occurred and be continuing a Default or Event of
Default with respect to, the notes.
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In addition, beneficial interests in a Global Note may be exchanged for
Certificated Notes upon prior written notice given to the trustee by or on
behalf of DTC in accordance with the Indenture. In all cases, Certificated
Notes delivered in exchange for any Global Note or beneficial interests in a
Global Note will be registered in the names, and issued in any approved
denominations, requested by or on behalf of DTC (in accordance with its
customary procedures) and will bear the applicable restrictive legend referred
to in "Notice to Investors," unless that legend is not required by applicable
law.
Exchange of Certificated Notes for Global Notes
Certificated Notes may not be exchanged for beneficial interests in any
Global Note unless the transferor first delivers to the trustee a written
certificate (in the form provided in the Indenture) to the effect that the
transfer will comply with the appropriate transfer restrictions applicable to
those notes. See "Notice to Investors."
Exchanges Between Regulation S Notes and Rule 144A Notes
Prior to the expiration of the Distribution Compliance Period, beneficial
interests in the Regulation S Global Note may be exchanged for beneficial
interests in the Rule 144A Global Note only if:
(1) the exchange occurs in connection with a transfer of the notes
pursuant to Rule 144A; and
(2) the transferor first delivers to the trustee a written certificate
(in the form provided in the Indenture) to the effect that the notes are
transferred to a person:
(a) who the transferor reasonably believes to be a qualified
institutional buyer within the meaning of Rule 144A;
(b) purchasing for its own account or the account of a qualified
institutional buyer in a transaction meeting the requirements of Rule
144A; and
(c) in accordance with all applicable securities laws of the states
of the United States and other jurisdictions.
Beneficial Interests in a Rule 144A Global Note may be transferred to a
person who takes delivery in the form of an interest in the Regulation S Global
Note, whether before or after the expiration of the Distribution Compliance
Period, only if the transferor first delivers to the trustee a written
certificate (in the form provided in the Indenture) to the effect that the
transfer is being made in accordance with Rule 903 or 904 of Regulation S or
Rule 144 (if available) and that, if the transfer occurs prior to the
expiration of the Distribution Compliance Period, the interest transferred will
be held immediately thereafter through Euroclear or Clearstream.
Transfers involving exchanges of beneficial interests between the Regulation
S Global Notes and the Rule 144A Global Notes will be effected in DTC by an
instruction originated by the trustee through DTC's Deposit/Withdraw at
Custodian system. Accordingly, in connection with any such transfer,
appropriate adjustments will be made to reflect a decrease in the principal
amount of the Regulation S Global Note and a corresponding increase in the
principal amount of the Rule 144A Global Note or vice versa, as applicable. Any
beneficial interest in one of the Global Notes that is transferred to a person
who takes delivery in the form of an interest in the other Global Note will,
upon transfer, cease to be an interest in the first Global Note and will become
an interest in the other Global Note. Accordingly, that transferred interest
will thereafter be subject to all transfer restrictions and other procedures
applicable to a beneficial interest in the other Global Note for so long as it
remains an interest in the other Global Note. The policies and practices of DTC
may prohibit transfers of beneficial interests in the Regulation S Global Note
prior to the expiration of the Distribution Compliance Period.
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Same Day Settlement and Payment
We will make payments in respect of the notes represented by the Global
Notes (including principal, premium, if any, interest and liquidated damages,
if any) by wire transfer of immediately available funds to the accounts
specified by the Global Note holder. We will make all payments of principal,
interest and premium and liquidated damages, if any, with respect to
Certificated Notes by wire transfer of immediately available funds to the
accounts specified by the holders of those notes. If no account is specified by
a holder, we will mail a check to that holder's registered address. The notes
represented by the Global Notes are expected to be eligible to trade in the
PORTAL market and to trade in DTC's Same-Day Funds Settlement System, and any
permitted secondary market trading activity in the notes will, therefore, be
required by DTC to be settled in immediately available funds. We expect that
secondary trading in any Certificated Notes will also be settled in immediately
available funds.
Because of time zone differences, the securities account of a Euroclear or
Clearstream participant purchasing an interest in a Global Note from a
Participant in DTC will be credited, and that crediting will be reported to the
relevant Euroclear or Clearstream participant, during the securities settlement
processing day (which must be a business day for Euroclear and Clearstream)
immediately following the settlement date of DTC. DTC has advised us that cash
received in Euroclear or Clearstream as a result of sales of interests in a
Global Note by or through a Euroclear or Clearstream participant to a
Participant in DTC will be received with value on the settlement date of DTC
but will be available in the relevant Euroclear or Clearstream cash account
only as of the business day for Euroclear or Clearstream following DTC's
settlement date.
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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes the material U.S. federal income tax
consequences and, in the case of non-U.S. holders, U.S. federal estate tax
consequences, of the acquisition, ownership and disposition of the notes by
investors that acquire the notes from the initial purchasers in this offering
at a cash purchase price equal to the "issue price" of the notes. The issue
price is the first price at which a substantial amount of the notes is sold
other than to bond houses, brokers, or similar persons or organizations acting
in the capacity of underwriters, placement agents or wholesalers.
This summary does not discuss all of the aspects of U.S. federal income and
estate taxation which may be relevant to investors in light of their particular
investment or other circumstances. In addition, this summary does not discuss
any U.S. state or local income or foreign income or other tax consequences.
This summary is based upon the provisions of the Internal Revenue Code of 1986,
Treasury regulations, rulings and judicial decisions, all as in effect as of
the date of this prospectus and all of which are subject to change or differing
interpretation, possibly with retroactive effect. The discussion below deals
only with the notes held as capital assets within the meaning of the Internal
Revenue Code of 1986, and does not address purchasers of the notes that may be
subject to special rules. Purchasers that may be subject to special rules
include:
. some U.S. expatriates;
. financial institutions;
. corporations that accumulate earnings to avoid U.S. federal income tax;
. persons liable for alternative minimum tax;
. controlled foreign corporations, passive foreign investment companies or
foreign personal holding companies;
. insurance companies;
. tax-exempt entities;
. dealers in securities or currencies;
. certain traders in securities;
. holders whose functional currency is not the U.S. dollar;
. persons that acquire the notes for a price other than their issue price;
and
. persons that hold the notes as part of a straddle, hedge, constructive
sale, conversion or other integrated transaction.
If a partnership holds notes, the tax treatment of a partner will generally
depend upon the status of the partner and the activities of the partnership. If
you are a partner of a partnership holding the notes, you should consult your
tax advisor.
You should consult your own tax advisor regarding the particular U.S.
federal, state and local and foreign income and other tax consequences of
acquiring, owning and disposing of the notes that may be applicable to you.
U.S. Federal Income Tax Consequences to U.S. Holders
For purposes of the following discussion, a "U.S. holder" is a beneficial
owner of a note that is, for U.S. federal income tax purposes:
. an individual citizen or resident of the United States;
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. a corporation or partnership created or organized in or under the laws
of the United States or any of its political subdivisions;
. an estate, the income of which is subject to U.S. federal income
taxation regardless of its source; or
. a trust (i) that is subject to the supervision of a court within the
United States and the control of one or more U.S. persons as described
in section 7701 (a) (30) of the Internal Revenue Code of 1986; or (ii)
that has a valid election in effect under applicable U.S. Treasury
regulations to be treated as a United States person.
Interest
It is expected that the notes will not be issued with original issue
discount. In such case, in general, interest on a note will be taxable to a
U.S. holder as ordinary interest income at the time it is received or accrued
in accordance with the U.S. holder's regular method of accounting for U.S.
federal income tax purposes.
Dispositions
Upon the sale, exchange, retirement, redemption or other taxable disposition
of a note, a U.S. holder generally will recognize taxable gain or loss in an
amount equal to the difference, if any, between the amount realized on the
disposition and the U.S. holder's tax basis in the note. The amount realized on
the disposition of the note will not include any amount received that is
attributable to accrued but unpaid interest, which will be taxable in the
manner described above under "Interest" if not previously included in income. A
U.S. holder's tax basis in a note generally will equal the U.S. holder's cost
of the note. Gain or loss recognized by a U.S. holder on the taxable
disposition of a note generally will be capital gain or loss. The capital gain
or loss will be long-term capital gain or loss if the note has been held for
more than one year at the time of the disposition. Long-term capital gain
recognized by a non-corporate U.S. holder generally will be subject to a
maximum tax rate of 20%. The deduction of capital losses is subject to
limitations.
Information Reporting and Backup Withholding
In general, information reporting requirements will apply:
. to payments of principal and interest made on a note; and
. to payment of the proceeds of a sale or exchange of a note before
maturity,
that are made to a non-corporate U.S. holder. A "backup withholding" tax of 31%
will apply to such payments if the holder fails to provide a correct taxpayer
identification number or otherwise comply with applicable requirements of the
backup withholding rules. The backup withholding tax is not an additional tax.
Any amounts withheld under the backup withholding rules from a payment to a
U.S. holder will be allowed as a credit against the holder's U.S. federal
income tax liability and may entitle such holder to a refund of such withheld
amounts, provided the required information is furnished to the Internal Revenue
Service.
U.S. Federal Income and Estate Tax Consequences to Non-U.S. Holders
For the purposes of the following discussion, a "non-U.S. holder" is a
beneficial owner of a note that is not a U.S. holder.
Under present U.S. federal income and estate tax law and subject to the
discussion of backup withholding below:
(a) payments of principal and interest on a note by us or any of our
paying agents to a non-U.S. holder will not be subject to withholding of
U.S. federal income tax, provided that:
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. the non-U.S. holder does not actually or constructively own ten
percent or more of the total combined voting power of all classes of
our voting stock within the meaning of section 871(h)(3) of the
Internal Revenue Code of 1986 and the Treasury regulations
thereunder;
. the non-U.S. holder is not (1) a controlled foreign corporation that
is related, directly or indirectly, to us through sufficient stock
ownership, or (2) a bank whose receipt of interest on a note is
described in Section 881(c)(3)(A) of the Internal Revenue Code of
1986; and
. either (1) the beneficial owner of the note provides its name and
address and certifies to us or our paying agent, under penalties of
perjury, that it is not a "United States person" within the meaning
of the Internal Revenue Code of 1986 (which certification may be
made on an Internal Revenue Service ("IRS") Form W-8 (or successor
form)) or (2) a securities clearing organization, bank or other
financial institution that holds customers' securities in the
ordinary course of its trade or business and holds the note on
behalf of the beneficial owner certifies to us or our paying agent
under penalties of perjury that it, or the financial institution
between it and the beneficial owner, has received such statement and
provides the payor with a copy of this statement.
The certification requirement referred to above may also be satisfied
with other documentary evidence for interest paid with respect to an
offshore account or through certain foreign intermediaries;
(b) a non-U.S. holder will not be subject to U.S. federal income tax on
any gain or income realized on the sale, exchange, redemption, retirement
at maturity or other disposition of a note (provided that, in the case of
proceeds representing accrued but unpaid interest not previously included
in income, the conditions described in paragraph (a) above are met) unless:
. in the case of gain, the non-U.S. holder is an individual who is
present in the United States for 183 days or more during the taxable
year of such sale, exchange, redemption, retirement at maturity or
other disposition and specific other conditions are met; or
. such gain or income is effectively connected with the conduct of a
U.S. trade or business by the non-U.S. holder, or, if an income tax
treaty applies, is generally attributable to a U.S. "permanent
establishment" maintained by the non-U.S. holder; or
. the non-U.S. holder is subject to provisions of U.S. tax law
applicable to certain U.S. expatriates; and
(c) a note held by an individual who at the time of death is not a
citizen or resident of the United States, as specifically defined for U.S.
federal estate tax purposes, will not be subject to U.S. federal estate tax
as a result of death if, at the time of death:
. the individual did not actually or constructively own ten percent or
more of the total combined voting power of all classes of our stock
entitled to vote within the meaning of section 871(h)(3) of the
Internal Revenue Code of 1986 and the Treasury regulations
thereunder; and
. the interest payments with respect to such note would not have been,
if received at the time of such individual's death, effectively
connected with the conduct of a trade or business by the individual
in the United States.
As more fully described under "Description of the notes--Registration
Rights; Liquidated Damages," upon the occurrence of certain enumerated events
we may be required to pay liquidated damages to you. It is possible that such
payments might be subject to U.S. federal withholding tax.
If a non-U.S. holder cannot satisfy the conditions described in (a) above,
payments of interest made to such non-U.S. holder will be subject to a 30% U.S.
federal withholding tax, unless such non-U.S. holder provides us with a
properly executed (1) IRS Form W-8BEN (or successor form) claiming an exemption
from or reduction in withholding under the benefit of an applicable tax treaty
or (2) IRS Form W-8ECI (or successor
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form) stating that interest paid on a note is not subject to withholding tax
because it is effectively connected with the conduct of a trade or business in
the United States.
If a non-U.S. holder is engaged in a trade or business in the United States
and interest on, or gain with respect to, the note is effectively connected
with the conduct of this trade or business or, if an income tax treaty applies,
and the non-U.S. holder maintains a U.S. "permanent establishment" to which the
interest or such gain is generally attributable, the non-U.S. holder, although
exempt from the withholding tax on interest discussed in the preceding
paragraph, will be subject to U.S. federal income tax on the interest and the
gain on a net income basis in the same manner as if it were a U.S. holder. If
said non-U.S. holder is a foreign corporation, it may be subject to a branch
profits tax equal to 30%, or lesser rate under an applicable tax treaty, of its
effectively connected earnings and profits for the taxable year, subject to
certain adjustments. For this purpose, interest on a note or gain recognized on
the disposition of a note will be included in earnings and profits if the
interest or gain is effectively connected with the conduct by the foreign
corporation of a trade or business in the United States.
In general, backup withholding and information reporting will not apply to
payments made by us or our paying agents, in their capacities as such, to a
non-U.S. holder of a note if the holder has provided the required certification
that it is not a United States person as set forth in paragraph (a) above,
provided that neither we nor our paying agent has actual knowledge that the
holder is a United States person. Payments of the proceeds from a disposition
by a non-U.S. holder of a note made to or through a foreign office of a broker
will generally not be subject to information reporting or backup withholding.
However, information reporting will apply to those payments if the broker is:
. a United States person;
. a controlled foreign corporation for U.S. federal income tax purposes;
. a foreign person 50% or more of whose gross income from all sources is
effectively connected with a U.S. trade or business for a specified
three-year period; or
. a foreign partnership, if at any time during its tax year, one or more
of its partners are U.S. persons, as defined in Treasury regulations,
who in the aggregate hold more than 50% of the income or capital
interest in the partnership or if, at any time during its tax year, the
foreign partnership is engaged in a U.S. trade or business,
unless (1) such broker has documentary evidence in its records that the
beneficial owner is not a United States person and certain other conditions are
met or (2) the beneficial owner otherwise establishes an exemption.
Payments of the proceeds from a disposition by a non-U.S. holder of a note
made to or through the U.S. office of a broker is subject to information
reporting and backup withholding unless the statement described in (a) above
has been received (and the payor does not have actual knowledge that the
beneficial owner is a United States person) or the holder or beneficial owner
otherwise establishes an exemption from information reporting and backup
withholding.
You should consult your own tax advisor regarding application of backup
withholding and information reporting in your particular circumstance and the
availability of and procedure for obtaining an exemption therefrom. The backup
withholding tax is not an additional tax. Any amounts withheld under the backup
withholding rules from a payment to a non-U.S. holder will be allowed as a
credit against the holder's U.S. federal income tax liability and may entitle
such holder to a refund of such withheld amounts, provided the required
information is furnished to the Internal Revenue Service.
77
PLAN OF DISTRIBUTION
We will receive no proceeds in connection with the exchange offer.
Each broker-dealer that receives New Notes for its own account in connection
with the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of New Notes. This prospectus, as it may be amended
or supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Old Notes where the Old
Notes were acquired as a result of market-making activities or other trading
activities. We have agreed that for a period ending upon the earlier of (1) 180
days after the exchange offer has been completed or (2) the date on which
broker-dealers no longer own any Transfer Restricted Securities, we will make
available and provide promptly upon reasonable request this prospectus as
amended or supplemented, in a form meeting the requirements of the Securities
Act to any broker-dealer for use in connection with any resale.
New Notes received by broker-dealers for their own account in the exchange
offer may be sold from time to time in one or more transactions in the over-
the-counter market, in negotiated transactions, through the writing of options
on the New Notes or a combination of these methods of resale, at market prices
prevailing at the time of resale, at prices related to prevailing market prices
or negotiated prices. Any resale may be made directly to purchasers or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any broker-dealer and/or the purchasers of any New Notes.
LEGAL MATTERS
Certain legal matters relating to the issuance of the New Notes will be
passed upon for us by Akerman, Senterfitt & Eidson, P.A., Miami, Florida.
EXPERTS
The audited consolidated financial statements and schedule of SBA
Communications Corporation incorporated by reference in this prospectus and
elsewhere in the registration statement have been audited by Arthur Andersen
LLP, independent certified public accountants, as indicated in their reports
with respect thereto, and are included herein in reliance upon the authority of
said firm as experts in giving said reports.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports and other information with the
Commission. You may read our Commission filings over the Internet at the
Commission's website at http://www.sec.gov. You may also read and copy
documents at the Commission's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549 or at its regional offices located at 7 World Trade
Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Please call the
Commission at 1-800-SEC-0330 for further information on the public reference
rooms.
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[LOGO OF SBA COMMUNICATIONS]
SBA Communications Corporation
Exchange Offer for $500,000,000
10 1/4% Senior Notes due 2009
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PROSPECTUS
April 16, 2001
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Exchange Agent:
State Street Bank and Trust Company
2 Avenue de Lafayette
Boston, MA 02111
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